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Trade Balance
Germany's plan will make euro crisis worse
Germany's plan will make euro crisis worse

European leaders are working feverishly to create what German Chancellor Angela Merkel is calling a "fiscal union" to restore private investor confidence in Europe and rekindle growth. Unfortunately, what she advocates will thrust Europe into a deeper economic crisis and leave European leaders without the fiscal and monetary policy tools necessary to combat recessions. The reforms Chancellor Merkel is pushing — hard caps on national government deficits — would ensure the ultimate demise of the euro, years of economic stagnation or worse. For many governments, those caps will be one-half or even one-quarter of recent annual deficits; to comply, they will drastically...