Germans and Dutch dismiss proposals

AFFORDABLE borrowing from the markets in exchange for a strictly enforced set of rules on national budgets will give eurozone countries the kinds of benefits the US Treasury has today, European Commission president Jose Barroso promised.

However, the carefully crafted set of proposals designed to address Germany’s demand for more fiscal rectitude were immediately dismissed by Chancellor Angela Merkel and fellow AAA-rated colleague, the Dutch finance minister.

While Mr Barroso warned that it was a matter of sharing sovereignty, or handing it over to the markets, the investors gave Germany a fright, buying just over half the €6 billion German 10-year bonds the government hoped to sell. This was the first time this happened since the adoption of the euro, but analysts pointed out the German bund is also at an historically low rate of just 1.98% reflecting its popularity, as investors in recent days flocked to the bund in preference to other AAA-rated bonds.