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The crux of the matter for the European debt crisis is this: Will they save themselves, or will they allow the eurozone experiment to fail?
I have been in the camp that the financial powers in charge would do what was necessary to save the economic union. I thought that even though they appeared not to fear the type of collapse the US suffered in 2008, they would eventually "get it" and back their sovereigns and banking system.
ECB: Not Our Job
And yet they continue to surprise me with their steadfast resolve not to bail out anyone. The ECB basically says "that's not our job." I'm sure it isn't. But this is a crisis they didn't anticipate. And the global economy needs them to start putting out some fires.
No one expects the ECB to be responsible for Italy's $1.9 trillion in debt. But even the announcement of significant support for Italian bonds would calm markets. This morning's purchases were probably seen as too little, too late.
We know that deep and systemic structural debt problems are not solved overnight with bailout money. What confounds us about this crisis is that they didn't prepare for it years ago by getting Italy to submit to oversight from the IMF and EU and begin the process of restructuring.
Since they waited until the fires were burning, now they have to act swiftly and boldly, ala the US Fed and Treasury during our crisis.
Euros: A Common Language of Prosperity
The fact that the much-discussed boosting of the European Financial Stability Facility (EFSF) to $1 trillion euros may not happen until December is further foot-dragging the global economy can't tolerate.
I think the natural conflict and indecision makes sense when you contemplate the diversity of cultures and languages having to agree on who should pay for whose misfortunes down the road. And they can't go re-writing their economic constitution every year with new exceptions.
Still, there are lots of good reasons for the health of all euro area economies to maintain the union and the common currency.
See the following analysis from Reuters about how good things really are for Germany under the eurozone stars. They will definitely think twice before giving up on their indebted brethren.
Kevin Cook is a Senior Stock Strategist with Zacks.com
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