Role Reversal in Europe

This is a shocking sentence:

It has come to this: Germany will almost certainly have a bigger budget deficit next year than Italy will.

In fact, Italy isn't the only EU country showing more restraint than Germany:

“There is something really odd going on here, with Italy being more prudent, Spain getting more serious and even the French talking about pension cuts,” said Gilles Moëc of Deutsche Bank. “Germany is the odd one out.”

Of course inflation has traditionally been a more salient concern in Germany than budget deficits, and despite Frankfurt's influence in the ECB it will likely not be able to jigger the Euro to get out of budget problems. But with debt pressures mounting all over Europe, the coming months might put more pressure on the Euro and ECB than ever before.

To be continued...