It is difficult to see how a continuing increase in unemployment, balance of payments deficits and mounting foreign and public debt can go on. Something has to give in sooner rather than later: either the German have to be less restrictive in her attitude to mutual support or the Southern countries will leave one by one.
When Mrs Merkel says that every German housekeeping knows that you cannot take care of debt with (additional) debt, says nothing new, but deeply wrong.
The fear of a runaway inflation in Germany, and everywhere in Europe, is not justified now, while depressing demand and mass unemployment will not put the countries in trouble in a position to pay their debts.
Anyone with half a brain knows that when unemployment is high and economic growth still painfully slow, cutting the deficit too much would make a bad situation even worse.
