Let me first say that if you’re following the eurocrisis then this article is a must-read. You get a first-hand description of the famed June 28 summit ultimatum from Monti himself. The Germans do not deny his version of events but merely refuse to comment on them. In this case, the silence is deafening.
Despite telling a great story, the reporters fall into the same old euro traps. Read this passage:
The Italian-German conflict has also exposed a deep philosophical fissure at the heart of the euro zone: Are painful reforms and austerity in countries such as Italy and Spain enough to restore confidence in the common currency, as Germany has insisted? Or do they need Europe’s collective financial support while they fix their economies, as Mr. Monti argues?
The solution is not either-or, it is both. Spain and Italy need to reform their economies dramatically. The reforms will eventually lead to productivity gains which spur growth, but in the meantime these countries will need help financing themselves. As long as both sides are fighting over which one of these things to do, they will not be able to save themselves.