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European Debt Crisis

Leaders plan to change E.U. treaties to help solve crisis

Stephen Beard Nov 24, 2011

Jeremy Hobson: Now let’s get to the news out of Europe this morning. Leaders of France, Italy and Germany are meeting in Strasbourg, and here’s the headline: They want to change E.U. treaties so they can better deal with the debt crisis.

To explain, we’re joined live by our European correspondent Stephen Beard. Hi Stephen.

Stephen Beard: Hello Jeremy.

Hobson: So they want to change the treaties — what does that mean and is this some kind of a breakthrough?

Beard: No, it’s not a breakthrough — not a real breakthrough. There’s never been any real disagreement between Germany and France on this. They both agree that in order to get the 17 eurozone governments on the same page, running their budgets along similar lines in the future, there will have to be treaty changes to provide for things like closer outside scrutiny and control of budgets.

But real disagreement between the two has been over how to tackle the immediate crisis now. And one of the main points of disagreement has been over the role of the European Central Bank. France and others feel the European Central Bank should be acting like the Federal Reserve and printing money and buying up billions of dollars of eurozone government bonds.

The Germans, however, think that would be inflationary — no change there. Chancellor Merkel said again today there will be no change in the role of the European Central Bank.

Hobson: And what about the latest news that’s coming in from all over Europe, Stephen — and not great news? We’ve got this news out of Portugal today — they’ve been downgraded by Fitch — their debt — to junk status. Germany obviously yesterday had this bad bond sale — they couldn’t sell all the bonds they wanted to. And Ireland now wants more help from Europe to deal with its bank bailout. Things seem to be going in the wrong direction.

Beard: Yeah, everyday, more bad news. I mean, the market is telling politicians, “we need clear, decisive, coordinated action — we want the eurozone to come together and act like one country in a crisis.”

But the politicians can’t do that, they can’t go that far — certainly Chancellor Merkel can’t go that far. The German voters have been telling her they don’t trust their European partners; they’re not going to back up Greece, Spain, Portugal and Ireland, Italy with hard cash.

Hobson: Marketplace’s Stephen Beard in London, thanks Stephen.

Beard: OK Jeremy.

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