Will the Merkel-Sarkozy plan fix Europe?

Europe's leaders move to impose fiscal discipline — just the sort of discipline that might have averted a debt crisis in the first place

German Chancellor Angela Merkel and French President Nicolas Sarkozy presented a plan Monday that would penalize eurozone countries with out-of-control deficits.
(Image credit: John Van Hasselt/Corbis)

On Monday, German Chancellor Angela Merkel and French President Nicolas Sarkozy unveiled a proposal to amend the European Union's governing treaties and impose greater central control over member nations' finances. Stocks ticked higher on the news, suggesting the plan made investors a little more optimistic that European leaders might find a way to dig out of their debt crisis. But the Standard & Poor's rating agency still issued a warning that it might downgrade the debt of 15 eurozone countries. Is a solution at hand, or is that just wishful thinking?

Finally, a promising plan: A cynic would say this is just another doomed "save the euro" plan, says Richard Quest at CNN. "But this one is different. For the first time," Europe's leaders are trying "seriously to tackle the underlying problem and create a 'fiscal compact' of better budgetary and management for the eurozone." We can't go "singing merrily down the road to recovery" — getting the squabbling 27 EU members to agree won't be easy — but this is a fine start.

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