Germany reluctant to agree to eurobonds
A busker plays beside a pizza parlour offering one euro pizzas on November 20, 2011 in Madrid, Spain.
Steve Chiotakis: Europe's biggest economy, Germany, today had trouble selling its bonds -- meaning the European debt crisis is affecting even the continent's strongest country. Meanwhile, the European Commission said today it wants to strengthen the monitoring of individual economies.
And one key idea is to allow all the countries that use the euro -- including Germany -- to borrow money as a group, in the form of a eurobond.
In London, here's Marketplace's Stephen Beard.
Stephen Beard: The 17 eurozone countries have the same currency. But they borrow separately. And that's where the crisis has occurred. Doubts have grown about the creditworthiness of Greece, Ireland, Portugal, Italy and Spain. And that has driven investors to demand a much higher rate of interest from these countries making it much more a difficult for them to borrow.
The plan unveiled in Brussels today is for the eurozone countries to borrow together as a group -- to issue a so-called eurobond guaranteed by all 17 nations, including the strongest: Germany. That would dramatically cut the borrowing costs of the weaker countiries.
But James Goundry of IHS Global Insight says there's just one problem: Germany is dead against the idea.
James Goundry: Germany is reluctant to underwrite european debt as long as southern economies such as Italy and Greece and Portugal fail to reform their economies. They're worried that as soon as they underwrite the debt the incentive is removed for these economies to reform.
The Germans say they would support the eurobond plan but only after all the eurozone countries submit to much greater outside scruitiny and control of their budgets by European officials in Brussels.
In London I'm Stephen Beard for Marketplace.