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German Chancellor Angela Merkel listens to a speech during a session of Germany's Bundestag lower house of parliament, in Berlin November 23, 2011. (JOHN MACDOUGALL/OHN MACDOUGALL/AFP/Getty Images)
German Chancellor Angela Merkel listens to a speech during a session of Germany's Bundestag lower house of parliament, in Berlin November 23, 2011. (JOHN MACDOUGALL/OHN MACDOUGALL/AFP/Getty Images)

Can Europe be pushed into action? Add to ...

In its gloomy summary of the scarier developments in international markets – from rising bond yields, to an ugly German bond auction, to a contraction in Chinese manufacturing activity – the Economist’s Free Exchange blogger adds one blip of hope: Perhaps the onslaught of bad news will at last shake up policy makers in Europe.

There were hopeful signs from Germany: “This [Germany bond]auction result makes it all too clear that German bonds are not immune from the crisis but are being drawn into the debt swamp,” said Frank Schaeffler, a lawmaker from the Free Democratic Party, Merkel’s coalition partner, according to Bloomberg News. “If this doesn’t wake up the country to the current risks then I’ll be very surprised.”

Unfortunately, there isn’t a lot of confidence out there, whether for Germany or the European Central Bank. The Economist blogger himself noted on the prospect of the ECB cranking up the euro printing press: “But the ECB seems if anything more reluctant to save the situation than the German government.”

He points us to a column by Martin Wolf in the Financial Times, who noted that “potent interventions are unlikely, because of a misguided ideological resistance.” Even cutting interest rates seems like a stretch, given the ECB’s focus on inflation. Right now, Europe has the highest rates among advanced countries.

“As one official in Brussels remarked to me quite recently, the ECB risks being remembered by historians as the magnificently orthodox central bank of a failed currency union,” Mr. Wolf wrote.

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