Hans-Werner Sinn: Germany should not assume the obligations of Southern Europe’s debts

“…the risk posed by mutualisation of debt through eurobonds is much greater, as US history shows. After the US mutualised state debts in 1791 and, again, after the second war against Britain in 1813, states went on borrowing binges. A credit bubble emerged that burst in 1837 and pushed more than half of all states into insolvency. As Harold James of Princeton has shown, the only result of debt mutualisation was strife.”

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