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Corriere della Sera - Italy | Wednesday, May 23, 2012

Project bonds just a diversion

As an alternative to the euro bonds propagated by France, Germany has proposed so-called project bonds that would be used to finance cross-border infrastructure projects. But with this proposal the politicians are fleeing reality, economists Alberto Alesina and Francesco Giavazzi argue in the liberal-conservative daily Corriere della Sera: "Never have we been so close to the real threat of a collapse of the Monetary Union as we are now. … Given this historical situation, the idea that Europe needs more infrastructures to grow seems quite honestly preposterous. Europe really doesn't suffer from a lack of roads, trains or airports. Our politicians talk about infrastructure in an attempt to evade the real problems: state influence on the economy and difficult labour market reforms. It's high time Europe's leaders asked themselves whether they really want to save the euro or not. If they do, then they need to take action now, but please don't build more roads or railways."

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