Europe nears agreement on bailout fund that may be inadequate

The problem with the German analysis, notes Simon Tilford, chief economist at the CER, is that it is not simply self-righteous, ignoring the bad loans German banks made to the troubled nations, but arguably wrong. It is "probably incompatible," he added, with the survival of the eurozone, which all leaders insist is their aim. ... Mr Tilford and others argue that countries like Germany, which benefit from very low interest rates given the panic about other countries’ sovereign debt, need to raise their economic activity and consumption, while the European Central Bank, which raised interest rates in July out of misplaced fears of inflation, should cut them again and pump more money into the eurozone. ... "That such a moderate agreement is inciting and inflating so much ill feeling in Germany is very worrying ... It casts doubt that in the next six to nine months Germany will move fast and far enough to keep the car on the road."