France unveils its toughest budget in years

PARIS -- France's Socialist government announced the country's harshest budget in 30 years Friday, including $25.8 billion in new taxes.

The hardest hit will be major businesses and the rich, as President François Hollande stuck to his May election pledge to introduce a new "supertax" rate of 75% on those earning over $1.29 million a year.

However, France's public services escaped the major cuts that other Eurozone countries have enforced in the battle to rein in their sovereign debt.

The government needs to find around $47.7 billion to bring France's public deficit down to 3% of gross domestic product by next year, in line with European Union rules. The deficit is currently about 4.5%.

Two-thirds of the deficit cutting is to be made through new taxes and one-third in spending cuts. The government promised that after 2014 the split between taxes and spending cuts would be 50-50.

Of the $12.9 billion in new taxes on companies, most will be raised on large corporations through the removal of tax breaks and exemptions.  Another $12.9 billion of new taxes on households will affect only top earners, said French Prime Minister Jean-Marc Ayrault, who insisted 90% of taxpayers would be spared.

The "supertax" rate of 75%, a controversial populist measure, will apply for at least two years but affects only 2,000 to 3,000 people. However, a new 45% tax rate will be imposed on those earning over $194,000.

Pierre Moscovici, the finance minister, said it was an "unprecedented" budget, but insisted it was necessary to comply with European Union rules of reducing the public deficit to 3%.

Just four months into his five-year term in office, Hollande is under fire from all sides.

As well as grumbling from business leaders, unemployment numbers that topped the symbolic level of 3 million in August and tumbling popularity in the opinion polls, the president is facing revolt from traditional allies in unions and left-wing groups that are threatening strikes if the budget is too austere.

A demonstration is planned for Sunday against the EU's fiscal treaty, which imposes strict deficit limits.


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Photo: French President Francois Hollande addresses reporters at the United Nations on Wednesday. Credit: Eric Feferberg / AFP/Getty Images

Greek anti-austerity protesters clash with police in Athens

ATHENS — Hurling sticks, stones and gasoline bombs, scores of militant youths clashed with police in central Athens on Wednesday, marring an anti-austerity protest and strike that saw hundreds of thousands of workers walk off the job and about 20,000 demonstrators throng the streets of the Greek capital.

The clashes between police and black-clad, self-styled anarchists capped a peaceful protest and 24-hour nationwide strike against looming budget cuts. The violence came a day after a large protest in Spain, which is also facing difficult decisions — and social unrest — over spending cuts brought on by the euro debt crisis.

The turmoil helped send European stocks swooning, with the euro dropping in value against the dollar.

Called by the country’s two biggest labor unions, Greece’s strike action on Wednesday marked the third nationwide protest to cripple the crisis-racked country since the start of the year. It was the first major grass-roots challenge to the strength and unity of the fledgling Greek government, a shaky coalition stitched together from disparate political forces after two divisive elections in May and June.

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Germany's supreme court OKs European bailout fund

Germany court

BERLIN -- Germany's supreme court has rejected petitions to block ratification of Europe's $640-billion rescue fund, giving the go-ahead for a key element of European leaders' strategy for combating the continent's long-running debt crisis.

The constitutional court was petitioned by 37,000 Germans who argued that the European Stability Mechanism, or ESM, contravened the country's constitution.

In what was viewed as one of the most important decisions in the court's 61-year history, the justices dismissed the petitions but imposed some significant conditions on the use of the ESM, namely a limit to Germany's liabilities.

The court ruled that a cap of 190 billion euros, about $245 billion, had to be set on Germany's contribution before the ESM was ratified. If the German parliament decides to back further funds, it can still do so. But the court's proviso will go some way to appease German taxpayers whose enthusiasm for the euro has waned significantly over their growing dissatisfaction that their money is being used to prop up debt-laden, reform-shy economies in southern Europe.

“The review has concluded that the laws that were challenged, with high probability, do not violate the constitution,” Andreas Vosskuhle, the court's president, said as onlookers in the courtroom stood to hear the verdict read out. “Hence the motions for a temporary junction are to be rejected."

Markets reacted positively to the news, with the euro reaching a four-month high against the dollar out of apparent relief that some of the conditions to be imposed on the bailout fund appear to be less cumbersome than had been feared.

German Chancellor Angela Merkel is expected to react to the ruling when she addressed the Bundestag later in the day. The ruling amounts to a considerable boost for her and her government, which championed the rescue fund.

Members of the German parliament expressed relief that the Bundestag's backing of the bailout fund and Europe's fiscal pact, which imposes budgetary discipline on its signatories, had not been toppled by the court.

“Finally the ESM can start to operate,” Frank-Walter Steinmeier, head of the opposition Social Democrats, said.


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Photo: Andreas Vosskuhle, the president of Germany's constitutional court, arrives at the court Wednesday ahead of a key ruling on the legality of Europe's permanent bailout fund. Credit: Thomas Kienzle / AFP/Getty Images

Eurozone pulls back from the brink of catastrophe -- again

NYSE floor Thursday
Europe's economic roller-coaster slowed to a safe stop Thursday, after the latest white-knuckled plunge toward disaster, when European Central Bank President Mario Draghi vowed to control soaring interest rates that threaten to bankrupt heavily indebted Eurozone countries.

The promise of "unlimited" intervention by the central bank to buy up bonds at rates that countries like Spain and Italy can afford brought immediate relief in the form of a global market rally. And unlike previous moves to suppress interest rates that were cast as temporary measures, the long-term commitment made by Draghi is expected to keep Eurozone borrowing costs sustainable for the foreseeable future, or at least until the next crisis comes along.

GlobalFocusAnd potential crises lurk around every corner.

There's a breathlessly anticipated ruling expected next week by Germany's Constitutional Court on whether the Eurozone bailout fund is legal. German Finance Minister Wolfgang Schaeuble professed confidence Thursday that the court would find a way to see the European Stability Mechanism and its $630-billion rescue funds as permissible, despite constitutional restrictions on government-to-government investment.

On the same day the German court rules, Dutch voters go to the polls. The Netherlands' governing coalition collapsed in April, the latest to fall to disagreements over austerity measures and how to impose them. Deep public spending cuts demanded by the monetary club's strict debt ceilings have inflicted high unemployment -- more than 11% throughout the 17-nation Eurozone -- and gouging cuts in public services, pensions and welfare. Popular anger over austerity pain has thrown out leaders in Greece, Spain, Portugal, Italy, France and elsewhere during the three years of the euro crisis.

Revolving-door leadership can only contribute to the instability of a continent always on the edge of social explosion, warn those who have been following the economic dramas.

"Patience is going to be tested in the coming months. We'll see whether people go back out into the streets," said Keith Savard, senior managing economist at the Milken Institute in Santa Monica. "Personally, I'm surprised they're not there now in countries like Greece."

The shaky governing coalition in Greece, the Eurozone's most debt-laden economy and scene of protests over draconian budget cuts, announced last week that it had agreed on another $14.5 billion in spending reductions for the next two years. Unemployment is nearly 25% -- matching that of Spain -- and Germany, the debt-reduction taskmaster of the Eurozone, has made clear that Athens won't get another cent from its neighbors as it struggles to get its deficits below the 3% Eurozone target.

Mark Weisbrot, co-director the Center for Economic and Policy Research in Washington, welcomed Draghi's announcement as an overdue demonstration that the central bank will act to spare Eurozone lending from the ravages of speculation that one or more member states might exit the currency club, leaving investors holding billions in bad loans.

But he views the commitment to keeping bond yields under control as correcting only one of two misguided policies of the Eurozone. The other, an ideological mission of conservative-led countries to gut the social welfare systems of southern neighbors, continues to imperil jobs, growth and stability throughout the Eurozone, Weisbrot said.

Until Thursday, the central bank had intervened to shore up the euro with belated and inadequate measures, undermining confidence in the currency that allowed speculators to drive up borrowing costs to unsustainable levels.

"They've been playing a game of chicken for the past two years, and Draghi got tired of these near-death experiences," Weisbrot said of the relatively new central bank chief's departure from the half measures of his predecessor, Jean-Claude Trichet.

"But what is really going on is completely political," Weisbrot added. Germany, Austria, Finland and other Eurozone countries with more prosperous economies "really do want to dismantle the welfare state in these southern countries and they are using the financial crisis to do that."

He likens Europe's fiscal conservatives to the Republican majority in the U.S. House of Representatives who have been pushing for debt reduction through cuts in programs for the jobless and the needy.

"They're not as extreme as the House Republicans, but in Europe there is so much more to take away. Europe has all kinds of things we don't have -- national healthcare systems that were quite good, for instance. Spain just cut more than $7 billion from healthcare," Weisbrot noted.

While the central bank pledge to hold down borrowing costs buoyed markets worldwide Thursday, Draghi made clear that countries won't be eligible for bond rate intervention unless they first seek help from the bailout fund, where further paring of government spending is likely to be a condition.

International Monetary Fund chief Christine Lagarde confirmed that more affordable loans will come only with more belt-tightening. She hailed Draghi's bond-buying initiative and promised IMF help "to secure finance at a reasonable cost while they undertake sustained macroeconomic adjustment."

Translation: loans in exchange for government cutbacks.


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Photo: Traders on the floor of the New York Stock Exchange on Thursday after announcement of a European Central Bank bond-buying program and stronger-than-expected data on the U.S. job market. The Dow Jones industrial average rose 245 points to close at the highest level since December 2007. But analysts remain wary of the Eurozone's long-term stability. Credit: Spencer Platt/Getty Images

European Central Bank to buy bonds of several troubled nations

European bank
FRANKFURT, Germany — The European Central Bank announced Thursday that it would buy the bonds of financially flailing countries such as Spain and Italy in unlimited quantities if necessary to keep their borrowing costs down, in an unprecedented move to keep a lid on the euro debt crisis.

ECB chief Mario Draghi said such bold intervention was necessary to relieve undue pressure on governments whose borrowing rates have hit unwarrantably high levels, fueled by investors’ “unfounded fears” that Europe’s common currency was heading for a messy, debt-induced death.

“Let me repeat … the euro is irreversible,” Draghi declared here in Frankfurt, where the ECB’s headquarters are located. “There is no going back to the lira or the drachma or to any other currency. It is pointless to bet against the euro.”

Investors had been waiting for weeks for Draghi to make good on a pledge to do “whatever it takes” to guarantee the euro’s survival. His assurance in July that he would act succeeded in preventing a flare-up of the debt crisis through August, when many of Europe’s leaders were off on vacation.

Under the plan, the ECB will step in as necessary in the bond-trading market to keep distressed countries’ borrowing costs down; it would not buy bonds directly from governments at auction. The purchases would focus on shorter-term debt maturing in one to three years, Draghi said.

The bond-buying program does not apply to countries, such as Greece, that are in the middle of full-scale bailout programs funded by their European partners.


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Photo: President of European Central Bank Mario Draghi listens to questions during a news conference in Frankfurt on Thursday. Credit: Michael Probst / AP  

Greek leader asks Germany for 'more room to breathe'

Samaras merkel
BERLIN -- Greek Prime Minister Antonis Samaras met with German Chancellor Angela Merkel on Friday in an effort to win two more years to meet his country's budget-deficit targets, but Merkel insisted that Athens stick to its stated commitments.

Facing a restless electorate that is hardening its opinions toward Greece, Merkel said Germany was prepared to help Athens remain in the 17-nation Eurozone. But she added that any renegotiation of Greece's bailout terms should wait until next month, when the so-called troika composed of the European Commission, European Central Bank and the International Monetary Fund is set to issue a progress report on Greece's economic and financial reforms.

In advance of his visit to Berlin, Samaras went on the offensive in the German media, saying in interviews that Greece simply needed "more room to breathe." In order to qualify for its next round of international aid, Greece must make about $14 billion in cuts by 2014. The center-right Samaras, who heads a shaky coalition government that was elected in June, said his country needs until 2016 because of its steep economic downturn.

But patience in Germany is wearing thin with Greece's continual failure to meet deadlines. After Friday's meeting with Samaras, Merkel reiterated her stance that "Greece is a part of the Eurozone, and I would like Greece to remain part of the Eurozone." But facing tough elections next year for a third term in office, she added that she "made clear in the talks that we of course expect from Greece that the commitments that were made be implemented, that deeds follow words."

Many in Merkel's center-right coalition haven't ruled out the possibility of a Greek exit from the euro. Even her finance minister, Wolfgang Schaueble, who has said he also does not want Greece to leave the euro, is setting up a working group to consider the possibility, the Financial Times Deutschland reported.

On Saturday, Samaras flies to Paris where he is likely to hear a similar message from President Francois Hollande. Merkel and Hollande met in Berlin on Thursday over a private dinner and afterward presented a unified front on the euro crisis and Greece's need to fulfill its pledges.


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Photo: Greek Prime Minister Antonis Samaras and German Chancellor Angela Merkel at a news conferece in Berlin on Friday. Credit: Stephanie Pilick / EPA

Greek leader pleads for more time to implement reforms

Greek Prime Minister Antonis Samaras launched a high-gear diplomatic offensive aimed at buying his country more time to implement reforms demanded by increasingly impatient European creditors
ATHENS -- With the Greek economy seizing up and the specter of sovereign default still looming, Prime Minister Antonis Samaras on Wednesday launched a high-gear diplomatic offensive aimed at buying his country more time to implement reforms demanded by increasingly impatient European creditors.

Samaras was set to meet with Prime Minister Jean-Claude Juncker of Luxembourg, the head of the 17-nation Eurozone and the most influential European policymaker to visit Greece since an election in June put Samaras at the head of a shaky conservative-led coalition government.

Although Juncker has frequently sympathized with Athens' struggle to jump-start its sputtering economy -- just last week, he lashed out against renewed speculation that Greece might be forced out of the euro -- it remained unclear whether he would support Samaras' plea for more time to make deeper austerity cuts.

Two previous governments have failed to comply with the terms of two multibillion-dollar bailouts given Greece by its European peers and the International Monetary Fund, which have so far spared this debt-laden Mediterranean nation and the rest of the Eurozone from the potentially catastrophic effects of a Greek bankruptcy.

Officials in Athens hope Wednesday's talks will build up positive momentum for crucial meetings Samaras is scheduled to hold later this week with German Chancellor Angela Merkel and French President Francois Hollande in Berlin and Paris, respectively.

Under the latest bailout deal, Greece has to deliver at least $14 billion in added budget cuts to keep its emergency loans flowing. The loans help Athens pay state salaries and pensions, among other expenses.

But now in its fifth year of deep recession, the Greek government says it needs a bit of a breather.

"All we want is a bit of 'air to breathe' to get the economy running and to increase state income," Samaras told Germany's Bild newspaper. He added that the request did not automatically mean that Greece needed more money from its creditors.

The conservative leader, who opposed the tough terms of the first bailout while in the opposition, stitched together his ruling coalition on the basis of a pledge to temper austerity with growth-oriented policies and to win an additional two years to fulfill Greece's commitments to its international lenders. The current deadline is 2014.

But Merkel and leaders in other Northern European nations have balked at any talk of giving Greece more leeway or more money. Analysts say Samaras faces a tall order in trying to convince them otherwise.

"This will be a very hard sell for the Greek government," Megan Greene of Roubini Global Economics wrote in a recent analysis. "A relaxation of fiscal targets would require additional funding for Greece, but asking the Bundestag to approve more bailout money ... is an absolute non-starter.”


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Photo: Greek Prime Minister Antonis Samaras, shown in Athens in July. Credit: Aris Messinis / AFP/Getty Images

Deepening recession heats up talk of Greece exiting Eurozone

European Central Bank President Mario Draghi

When the euro hit wallets and bank accounts on New Year’s Day a decade ago, champagne and fireworks greeted the Europeans' embarking on what was touted as an irrevocable course for prosperity and economic integration.

GlobalFocusOver the years, though, as the economies of Greece, Spain and other Eurozone nations became mired in debt, expectations of a happy commune of affluence have given way to thoughts of breaking off the laggards to save the herd. What the Economist and other journals have referred to as a kind of "Hotel California that you can never leave" now looks to some to be exactly the hellish trap evoked by the Eagles in their 1970s ballad.

Greek officials disclosed this week that their economy shrunk 6.2% from April through June and that unemployment is close to 24% and rising. The shaky coalition government, confronted by strikes and protests against earlier austerity measures, has yet to identify the last $5 billion or so in budget cuts it must make to qualify for the next tranche of bailout funds due in September.

The bad news came as little surprise to the Eurozone’s better-off members, Germany first among them, which have complained for months that Athens has repeatedly failed to demonstrate the will to pare its bloated government payroll and get serious about collecting taxes.

A delegation of the so-called troika of creditors -- the European Commission, the European Central Bank and the International Monetary Fund -- visited Athens last month and is expected to issue a critical report on the Greek balance sheet in September. That has shifted the conversation from whether Greece will exit the Eurozone to how many other common currency users might follow.

Even Greek analysts have become dubious of the country’s prospects for living up to the commitments made to get triple-digit billions in bailout funds. They have been issuing gloomy forecasts of an inevitable Greek exit -- or Grexit, as it has come to be called -- perhaps preparing the public for an eventual return to the drachma.

“The political system once more showed how counterproductive it is. Instead of designing a workable state, it tries to reproduce the one that already exists,” the Greek daily Kathimerini’s columnist Paschos Mandravelis groused Monday. In his analysis, titled “On another planet,” he accused the government of protecting well-connected allies and unproductive state jobs.

A week ago, Greek Finance Minister Yannis Stournaras said the government was still looking for about a third of the $15 billion in cuts to the 2013-14 budgets demanded by the troika in exchange for vital cash infusions. Debt inspectors are due back next month for a final review of whether Athens has gotten its finances in order, a judgment expected to be negative unless the government forces through deeply unpopular budget cuts and privatization plans in the final few weeks.

Elsewhere in the common currency club, the mood has changed from one of steadfast commitment to keeping the 17-nation Eurozone intact to mounting resignation that at least Greece will have to go.

Athens’ potential departure "has long since lost its horrors," German Economy Minister Philipp Roesler told ARD television recently. Luxembourg Prime Minister Jean-Claude Juncker, who chairs Eurozone finance ministers’ meetings, observed last week that a Greek exit would be “manageable.” On Monday, when German Chancellor Angela Merkel returned from a hiking vacation in the Italian Alps, she was confronted with even more dismissive comments by her coalition partners.

“An example must be made of Athens that the Eurozone can also show teeth,” Markus Soeder, Bavarian finance minister and member of a conservative sister party to Merkel’s Christian Democratic Union, told the Bild am Sonntag newspaper. He contended that Germany can ill afford to keep bailing out spendthrift euro members and that “further help to Greece is like pouring water into the desert.”

In the Economist cover story this week, a mock memo to Merkel on a possible Plan B advises her to consider two options to her current course of scrambling to hold the Eurozone together. One envisions Greece's departure, which alone could cost the euro area $398 billion in debt write-offs and transitional aid. The other scenario, in which Portugal, Ireland, Cyprus and Spain would also leave, could cost the rump Eurozone $1.4 trillion but halt the slow bleeding of bailouts to the struggling periphery, the respected London-based publication calculated.

Charles A. Kupchan, a professor of international affairs at Georgetown University and former European affairs director on the National Security Council under President Clinton, attributes the growing Grexit talk to an emerging consensus among economists that Athens' departure is a question of when, not if.

"Behind the scenes the European Union is making preparations for a Greek exit to contain the damage," he said of the latest assessments of the Eurozone's integrity.

Grexit would be manageable because of Greece's small economy and the fact that its finances are unlikely to ever meet Eurozone standards, Kupchan said. But he sees other departures as potentially destabilizing for the whole monetary union experiment.

"When you start talking about the Spanish or the Portuguese or the Irish leaving, that's a new ballgame," he said. "That's not a controlled exit of a member or two; it's a complete overhaul of the Eurozone."


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Photo: Mario Draghi, president of the European Central Bank, has pledged to do whatever it takes to protect the euro common currency. But mounting debts and persistent recession in some of the peripheral countries of the Eurozone have turned the conversation to managing the departure of Greece, instead of preventing it. Credit:  Hannelore Foerster / Bloomberg

European Central Bank doesn't act, disappointing markets

Mario Draghi
European Central Bank chief Mario Draghi vowed Thursday that the euro common currency is "irreversible," but the bank's decision to not ease borrowing costs for heavily indebted Eurozone members such as Spain and Italy drove markets into renewed turmoil.

Draghi had raised expectations that the central bank would act to reassure investors that the euro is a safe bet when he said last week that his institution would "do whatever it takes" to protect the common currency from bond market speculation.

Amid persistent recession in most of its member nations and unsustainable borrowing costs for those already saddled with massive debts, the European Central Bank (ECB) had been expected by investors and the troubled euro users to cut the interest rate or channel low-interest loans to member governments through a euro bailout fund.

At a news conference following a meeting of the ECB's governing council, Draghi said the bank officials acknowledged that "ongoing tensions in financial markets and heightened uncertainty" were damaging confidence in the common currency. He said strangling bond yields demanded by lenders were the result of "fears of the reversibility of the euro," which he deemed unacceptable and a perception that must be dispelled.

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Confidence teetering in Eurozone, economists warn

German Finance Minister Wolfgang Schaeuble and Treasury Secretary Timothy Geithner
It's been more than two decades since the Iron Curtain fell and Europeans embarked on an ambitious mission to build a powerful economic, political and social union in place of the Cold War divide. And for more than two decades, Germans have been footing most of the integration bill.

GlobalFocusCompassion fatigue set in long ago among the continent's most prosperous people, and the mounting costs of keeping the Eurozone intact a decade after the common currency was introduced have all but exhausted Germans' generosity toward their needy neighbors.

In this summer of economic discontent that is rattling financial markets worldwide, commitment to the 17-nation Eurozone has been a hard sell for German politicians whose constituents see only more expense and uncertainty with the wobbly fiscal union. Investors, too, seem to have increasing doubts about the euro's future and European Union leaders' ability to forge a viable plan for managing collective finances.

All eyes are on the European Central Bank this week following the vow of its president, Mario Draghi, to do whatever is necessary to keep Spain and Italy in the Eurozone despite skyrocketing interest costs for servicing their massive debts. The bank is constrained by European Union treaty provisions from loaning money directly to governments, and Germany has staunchly opposed proposals for funneling bank funds to needy member states through mechanisms meant to provide strictly supervised bailouts, not to bankroll loans.

The ECB “is ready to do what it takes to preserve the euro. Believe me, it will be enough,” Draghi assured investors last week, bringing about a short-lived reprieve in the interest rates demanded by lenders for 10-year bonds to finance Spanish and Italian debt.

"After Draghi's comments, expectations are quite high that the central bank will take action Thursday. But at the end of the day, the ECB cannot solve this problem," said Keith Savard, senior managing economist at the Milken Institute in Santa Monica.

The ECB can fiddle with collateral requirements and the refinance rate for some short-term relief, but what is needed to restore confidence in the euro is coordinated fiscal strategy and collective guarantees that new loans will be repaid, Savard said. It will take years, he noted, to execute the necessary legislation and treaty revisions once agreement is reached, which appears far from imminent as Germany and other Northern European euro users resist exposing their own good credit to the dodgy finances of some of their neighbors.

Uri Dadush, director of the international economics program at the Carnegie Endowment for International Peace in Washington, sees some progress -- "glacial," he said -- toward stabilizing the euro since May, when Greeks voted out the political coalition committed to the euro. Greeks managed to seat a pro-euro government in a second election in June, but they have yet to adopt the belt-tightening measures needed to get vital bailout funds due in August.

"There is urgency -- you see this in the volatility of the markets. But is catastrophe imminent? I don't think so. People know the ECB is there and, when push comes to shove, that the ECB will intervene," said Dadush.

Despite the barriers to direct lending to governments by the central bank, Dadush said it has managed to buy up at least $246 billion in government bonds at below-market interest for heavily indebted euro countries.

"Rules are there to be broken once the politicians decide this is what needs to be done," he said.

German resistance may also be broken, if the crisis escalates and threatens to further damage the market for Germany's cars, technology and other exports, said Fabian Zuleeg, chief economist at the European Policy Center in Brussels.

He is critical, though, of the German government's failure to make a strong case to its citizens about the benefits of preserving the currency union and moving forward with deeper financial integration.

"It's not a very positive way of engaging your citizens when you are scaring them into a situation where you say they don't have a choice," Zuleeg said.

All three economists interviewed Tuesday observed that Washington could help stabilize the euro if it were to buy the bonds of struggling states, demonstrating confidence in the currency that would inspire China, Japan, Brazil and other big economies to do likewise. They also agree there is virtually no chance that will happen, given the United States' own debt issues and a presidential election underway.

U.S. Treasury Secretary Timothy F. Geithner in effect confirmed Tuesday that the euro crisis would be left to the Europeans to resolve.

"This is completely within their financial ability to solve," Geithner said at a Los Angeles World Affairs Council event, although he  acknowledged that the politics of the problem may be a more difficult sell.


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Photo: German Finance Minister Wolfgang Schaeuble, left, meets Monday with U.S. Treasury Secretary Timothy Geithner at a vacation home on the North Sea island of Sylt, where they discussed the outlook for tackling the Eurozone debt crisis. During a Los Angeles visit Tuesday, Geithner made it clear that the euro woes were a matter for Europeans to resolve. Credit: Philipp Guelland / Associated Press


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