From the perspective of German leaders, the current crisis in Europe arose because profligate, irresponsible southern European countries were able to borrow at artificially low rates.  The artificially low rates came from the Euro itself, it confused the fiscal identity of states allowing the profligate to borrow at inappropriately low rates.  So how do they view Eurobonds?  As throwing fuel on the fire, because what will Eurobonds do except further confuse fiscal identities and allow irresponsible, profligate states to borrow at inappropriately low rates!   So for Germany, Eurobonds are conceivable ONLY AFTER there is a mechanism in place to positively prevent other states from being profligate with their borrowing and lax with their fiscal discipline!

All of this would make sense if the assumptions on which it were based were true.  They are not.  Other than Greece, the Eurozone countries in trouble were NOT profligate or fiscally irresponsible.  They were actually in good fiscal shape until hit by the global recession in 2008; it is four years of austerity programs that have pushed them so deep into debt that both sovereigns and their banks need help.

In a true community, in an emergency the strong would help the weak get back on their feet so they could all get moving forward again.  But Germany is showing that they do not see the EU as a true community; rather they see a fiscally responsible “us” vs. an irresponsible ‘them,’ and sharing of obligations will only undermine the fiscal strength that Germany has gained at great cost.  Moreover, German economists are arguing that the Euro was NOT good for Germany; and that Germany would do better back on the Deutsche mark.  See this IHT op-ed by Gunnar Beck: “Germany the Euro Winner? Hardly.”

With these views as the backdrop to the weekend summit, do not expect a dramatic German-supported rescue of the Euro or its weaker states.  If both Germany AND Greece agree on one thing — that each would be better off without the Euro — then it seems very likely it will be gone by the end of the year.