When I published this post about Euro bonds in March 2009 I actually imagined the present situation. Now even the European Commission proposes something along the same lines I sketched them out in my posts. They call it wrongly Stability Bonds just for cosmetics reasons, to try to be different.
It took the European Commission almost 3 years to understand the situation and table a proposal. It did it collating and collecting material on internet. Yet the first proposal was made in 1993 by Commission's President Jacques Delors.
The title of the James Bond movie on my post was Never say never again.
Today Spiegel on line International writes: German Resistance to Pooling Debt May Be Shrinking - "Never say never: The German government remains officially
opposed to controversial euro bonds. Behind the scenes, however, press
reports indicate that some within Chancellor Merkel's government have
begun discussing the conditions under which they might accept a pooling
of euro-zone debt".
After several years it's really time to say Never say never again.
Yet you have a Euro pessimist like Nobel Prize Paul Krugman writing that recent higher rates in Germany is to be seen as market "in effect pricing in a real possibility of eurozone collapse".
I think it's easier to think that actually the market is pricing and pushing the launch of Euro-bonds. Against this backdrop German rates will have to be a bit higher...
I still contend that EU bonds are necessary to further EU economic and financial integration as they are Bonds to be alive. Not just stability. I may technically also add they are now necessary to take European Central Bank out of impasse of buying bonds of doubtful value or incurring losses. De facto the ECB is already running on kind of notional EU bonds, at its expenses...
UPDATE: On issues like organisational set-up and conditions for entering the system of Euro-bonds, I think that it should be possible the transformation of EFSF/ESM into a full scale debt management agency where Member States could initially simply opt to transfer common issuance functions to the agency providing collateral (why not gold or revenues?) and guarantees (joint and several). Germany could even opt-out but it will realize immediately that actually competition within EU in issuing government bonds is not necessarily good and could result just in a beggar thy neighbour wrong policy. I do not see the need of treaties changes in such a transformation. Let's also avoid the proliferation of mechanisms, instruments and facilities as money is money and debt is debt.
UPDATE of 27/11/2011: Reading the press a new option to avoid treaties modifications appears and would also simplify the launch of Eurobonds: to sign a mini-stability pact (along the lines of Schengen for
immigration and just among those countries willing to do it with
opting-out of some) then to also launch euro-bonds with joint and several
guarantees of the mini-stability pact signatories. That means that Eurobonds system can be set up on a voluntary basis among those willing to abide by the rules and conditions of the pact.