"The risk of a financial meltdown in Europe is significant and growing each day. The financial fallout could be bigger than that following the collapse of Lehman Brothers in 2008, and could easily push the U.S. economy into recession. The European authorities are moving much too slowly to contain this risk. The European Central Bank (ECB), especially, is not fulfilling its function as a central bank to act as a lender of last resort in a crisis situation.
"The ECB needs to intervene in order to stop the yields on Italian and Spanish bonds from rising to the point where they are no longer able to borrow from private markets, as happened to Greece, Portugal, and Ireland. But it has refused to do so, and last week German Chancellor Angela Merkel directly rejected the idea of Eurobonds, on the grounds that it would reduce pressure on the weaker economies to cut their budgets. ...
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