The next two weeks will be critical for the EU's future with Germany taking a pivotal role and here's why: Germany may be the euro zone's economic power houses,pockets are deep.But they are fraying. Germany's central bank,the Bundesbank, is already on the hook for at least 800 billion dollars of peripheral country debt. And that's about a quarter of German GDP. This can't just be about Germany bank-rolling bailouts. Everyone is saying they need a deeper,more intergrated EU. Everyone of course,except for European politicians.
Now the marriage analogy here might be cliché but it so aptly describes the EU:married,in name only. They have yet to consummate this thing. Now what would that take will first, politically, they would have to take a big step to smooth out the economic bumps in weaker countries like Greece,Spain and Portugal. They are nursing recessions,high unemployment,and some are now suggesting that austerity has actually been self-defeating and responsible for triggering those recessions. Now that would mean committing to a more federal system,that in an orderly way makes transfer payments,a lot of those transfer payments coming from countries like Germany,those transfer payments going from strong countries to weaker ones whenever necessary. This may seem like Germany is committing to the footing the bill,with absolutely no payback,but the risk of contagion is real and here is why this is just one measure:if Spanish banks fail,German Banks remain the most exposed. I mean look at this: Germany taking on 10%. The pressure for Germany and others to fully commit to Europe in every way is strong and blunt and many like hedge fund billionaire George Soros are saying: Look . This is the warning you have little time and little room for debate now.
Paula, cnn, London.
