Europe weighs greater fiscal consolidation
People pass a pizzeria selling pizzas for one euro on the eve of the Spanish general elections on Nov. 19, 2011 in the center of Madrid, Spain.
Kai Ryssdal: Don't look now, but the European crisis is fixed.
OK, that's not entirely true, but you'd never know it to judge by the markets. Investors bet big today that the 17 countries that use the euro are edging toward something that'll put their debt crisis right. The phrase on everyone's lips today is 'fiscal union.' Which means -- what?
From the Marketplace European Desk in London, Stephen Beard explains.
Stephen Beard: Europe has been in crisis for two years. Some economists say the 17-nation currency bloc could soon collapse.
Now you would think would be the time to unveil a grand plan. But James Goundry of IHS Global Insight says what's under discussion is rather modest.
James Goundry: Sort of slightly more coordination and supervision of national economic policies within the eurozone. I think tentative steps towards something like that is more likely.
The German government insists this could work -- more centralized monitoring of national budgets and strict limits on national debt could create more investor confidence.
Greek journalist Matinas Stevas says it would be quite an intrusion on each country's right to set its own budget.
Matinas Stevas: Before any spending would happen, the partners would approve of that kind of spending.
Of course, if the eurozone turned itself into a real fiscal union with all the member states guaranteeing each other's debt, that would stop the crisis in its tracks. But Tim Leunig of the London School of Economics says that's not going to happen.
Tim Leunig: Germany is not going to want to give huge amounts other people who it sees as feckless. But equally, other people are not going to want to be bossed about by Germany and told what they can and cannot spend their money on.
And that's why the eurozone is only talking about a weaker form of fiscal union. The question is: Will it be enough to reassure investors?
In London, I'm Stephen Beard for Marketplace.