by Calculated Risk on 12/06/2010 09:17:00 AM

The European finance ministers are meeting today in Brussels. As we discussed over the weekend, some ministers are pushing to increase the bailout fund and others are arguing for "E-bonds" - joint European government bonds. As expected, Germany reject both suggestions ...

From the Irish Times: Germany rejects calls over debt fund

German Chancellor Angela Merkel said she saw no need to increase the size of the bailout mechanism.

Mrs Merkel also said the European Union treaty did not allow for issuing common bonds, which would anyway reduce the element of competition and the interest rate incentive for fiscal good behaviour.

The German view is the higher spreads are the penalty for bad behaviour.

The key 10-year bond yields fell sharply last week (Ireland, Portugal, Spain), but are up slightly today.