Question has been will ECB and thus implicitly Germany step up with effective guarantees to pull rest of Eurozone out of crisis. Dilution of German and ECB credit standing though may be a real concern as well as reason for Chancellor Merkel to pause. Just yesterday (November 23, 2011) Germany experienced an unprecedented problem, (at least in modern times since WW II), in selling its debt into the financial markets. Is Germany and by extension the ECB on precipice of being pulled down into the bottomless pit? Eurobonds? The clamor has been for the Eurozone to deploy its "big bazooka," the ECB and for it to become the lender of last resort. “Eurobonds” has become the new cheer as many are calling for the ECB (European Central Bank) to issue such on behalf of all sovereign Eurozone borrowers from Greece to Germany and thus be guaranteed by all. This though could mean that the stronger economies like Germany and the Netherlands could be dragged down rather than lifting up their Euro partners, that is without a common fiscal policy. Rating agencies have also sent signals of similar concern of potential dilution of credit standing of stronger Eurozone members if they effectively assume obligations of the weaker. Yesterday’s rather noxious hiccup in auction of German sovereign debt could be such an indication, (although it could be also be an extension of another symptom of crisis – Eurozone banks not buying any new assets when they are trying to shrink their base in order to by comparison increase capital base to meet higher standards – Read: - “European Banks Shed Sovereign Debt” - diplomaticallyincorrect.org/films/blog_post/european-banks-shed-sovereign-debt-by-ambassador-mo/41642 - but what happened to the Chinese or Russians?). Monti Python! In news conference after today’s Strasbourg summit between Merkel, French President Sarkozy and Italy’s new PM Mario Monti, they all tried to say the right thing. Mario Monti looked the better partner to the conversation than former Italian PM Silvio Berlusconi, but in the end they all came out looking more exposed for all their brave talk. With no Berlusconi to effectively provide a veneer of personal scandal the greater indignity of Europe looks ever more open to scrutiny. (Read: “Berlusconi Pimple on Financial Markets” - diplomaticallyincorrect.org/films/blog_post/berlusconi-pimple-on-financial-markets-by-ambassador-mo/41748 ). Perhaps Mario Monti Python it is not yet, but talk has now become largely meaningless – as a finance professional in my career - I can tell you it even has a cost unless it is precise and targeted in addressing the issue at hand. The financial markets do not want to hear any more efforts at soothing Euromusic or being comforted by claims of teamwork in the Eurozone – they are clamoring for a lender of last resort, but one with very deep pockets as the ECB/Germany. Pressure to “Join” New Euro Treaty! - Common Fiscal Policy & the Potential Long Road to Treaty Change? Chancellor Merkel is accurate is pointing out that establishing a single Eurozone debt issuer and/or guarantor as the ECB, (the EFSF “European Financial Stability Fund” appears to have already fallen off the credibility wagon - not either big enough or adequately empowered), requires an EU/Eurozone treaty change and a significant one at that – common fiscal policy as well as monetary. It is not certain how long such process would take, and it is certainly not clear that all of Europe will embrace it. Unfortunately for the Euro and Eurozone debt, the financial markets have no patience or conscience to be understanding. By Ambassador Muhamed Sacirbey Facebook – Become a Fan at “Diplomatically Incorrect”

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 International Financial Crisis Channel - diplomaticallyincorrect.org/c/international-financial-crisis