The rise of Italian and Spanish borrowing costs to alarming levels on Thursday heaped pressure on leaders to prevent Europe’s debt crisis from engulfing its largest countries. No grand solution appears imminent.

Of course no solution is imminent. The crisis in Europe is a result of decades of overspending driven by the expectations of the electorate. The problem is deep, ingrained and systemic so no quick fix exists.

German Chancellor Angela Merkel opposes solutions that many experts are pushing that would increase costs for Berlin.

It is her job to look after the interest of the Germans so no wonder she is opposing plans to rob them off their wealth to prop up the overspending losers in Europe.

Merkel has found herself isolated from the leaders of Spain, Italy and France, who want the 17 countries in the euro currency union to move quickly to bind their governments’ finances and debt.

The likes of Italy and France want to piggy-back on Germany to keep borrowing and overspending but Merkel is not keen on the idea. I guess being “isolated” from losers wanting to put a hand in one’s pocket is not a bad thing.

Such action could take the form of jointly issued debt or European-wide guarantees on bank deposits. Either step would spread the risks that individual countries bear across the eurozone.

This is the crux of the matter – Germany is the only economically viable, large country in Europe and others want to be able to keep borrowing using Germany as the underwriter of loans. Imagine yourself going out to dinner with a bunch of broke acquaintances. During dinner an idea emerges to pool the resources and have some drinks afterwards. If you were the only person burdened with cash would the idea of “pooling resources” not sound dodgy?

Italian Premier Mario Monti has agreed with French President Francois Hollande on the need for such measures.

Of course Signore Monti would be delighted to keep spending someone else’s money – this is the modus operandi of all socialists. Give me more money to spend – pronto!

But Germany, which as Europe’s largest economy bears most of the cost of bailouts, is reluctant to expose itself to further costs.

Can you blame them?

“We’re at a tipping point,” said Michael Hewson, a senior analyst at CMC Markets. “You either have to deliver or disband.”

European Union is doomed so “delivering” would only postpone the inevitable.


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