The euro rebounded on Thursday after China reaffirmed its long-term strategy of diversifying currency holdings away from the dollar and denied it was reviewing its holdings of euro sovereign bonds.
The euro has been rescued for the moment, but European politicians have thrown the foundations of Europe's common currency overboard with their unprecedented bailout package. In the longer term, the dangers of the crisis can only increase, and the flood of billions of euros could also lead to inflation
Markets in the United States and Europe fell and the euro hit another low for the year on Thursday after the European Central Bank disappointed investors hoping for decisive action to contain the euro zone's increasingly virulent debt crisis.
In a SPIEGEL interview, Jean-Claude Trichet, the 67-year-old president of the European Central Bank, discusses the largest financial rescue package in the history of Europe, the role and importance of speculators in the euro crisis and the weakness shown by politicians in the euro zone member states.
The audacious bid to protect the euro with a massive rescue fund seems to be faltering. The euro is still losing value as investors worry about the consequences of tough austerity measures. German papers on Friday dissect the common currency's ongoing problems.
The euro is becoming an ever greater threat to Europe's common future. The currency union chains together economies that are simply incompatible. Politicians approve one bailout package after the other and, in doing so, have set down a dangerous path that could burden Europeans for generations to come and set the EU back by decades.
Ireland's government has avoided immediate disaster by mustering just enough votes to pass its emergency budget. But now it must decide what to do next. Here, €6bn ($9.4bn) in new austerity measures are unlikely to be enough to put it back on the right path. Instead a more radical option should be seriously considered: leaving the euro.
The current Greek crisis has shown all too starkly the limits of the euro zone's sanction and support mechanisms. If the monetary union is to have a future, it needs new rules to keep members in line and bail them out if necessary.
European Union leaders are working around the clock to create a new measure to defend the euro before financial markets reopen on Monday. EU finance ministers will meet on Sunday to discuss the plan.
Europe's consistent inability to move quickly enough to get ahead of the financial markets during the Greece crisis is shaking the euro and the foundations of the European Union itself, as critics of the euro have long predicted would happen.
The EU faced the biggest test in its history last night as it launched a last-ditch effort to save the euro, amid acute fears that markets could unleash a fresh attack on the currency on Monday.
As the financial crisis in the euro zone worsens and the heads of the IMF and the ECB come to Berlin to persuade Germany to help Greece now, local commentators are calling for speed and decisiveness. As they see it, political jockeying before the May 9 election in North Rhine-Westphalia is no reason for German politicians to endanger the whole euro zone.
Nie wieder eine solche Krise: Der europäische Zentralbankpräsident Trichet ruft die Euro-Staaten zur Ordnung. In der "vielleicht schwierigsten Situation seit dem Ersten Weltkrieg" müssten sie endlich ihre Finanzpolitik konsolidieren, sagte er dem SPIEGEL - und bekommt Unterstützung von Kanzlerin Merkel.
Former Federal Reserve Chairman Paul Volcker said he's concerned that the euro area may break up after the Greek fiscal crisis that sparked an unprecedented bailout by the region's members.
The 750 billion euro package the European Union passed last week to prop up the common currency has been heavily criticized in Germany. Former Bundesbank head Karl Otto Pöhl told SPIEGEL that Greece may ultimately have to opt out, and that the foundation of the euro has been fundamentally weakened.
Europe has put up 750 billion euros in an effort to stop speculation against the European common currency. Still, it remains to be seen if financial markets will learn their lesson. After all, speculators aren't even being punished for the damage they have caused. But they should be.
On Wednesday, the government's partial ban on so-called naked short-selling took effect, as part of Berlin's effort to protect its biggest financial institutions and the euro currency from investors who have been betting against them.
What's striking about Spain, from an American perspective, is how much its economic story resembles our own. Like America, Spain experienced a huge property bubble, accompanied by a huge rise in private-sector debt. Like America, Spain fell into recession when that bubble burst, and has experienced a surge in unemployment. And like America, Spain has seen its budget deficit balloon thanks to plunging revenues and recession-related costs.
But unlike America, Spain is on the edge of a debt crisis. The U.S. government is having no trouble financing its deficit, with interest rates on long-term federal debt under 3 percent. Spain, by contrast, has seen its borrowing cost shoot up in recent weeks, reflecting growing fears of a possible future default.
Why is Spain in so much trouble? In a word, it's the euro.