Euro Debt: Should the euro zone's debt be mutualized?

http://www.economist.com/debate/overview/233

Paul De Grauwe and Ansgar Belke both agree that debt mutualization would bring along certain dangers, such as morality issues and the burden put on creditor countries through the increase in costs. They also agree that it’s important for European countries to pull weak banks and sovereigns from a vicious cycle. However, they differ in terms of solving the problem itself. Mr. De Grawe believes the problems brought along with debt mutualization could be avoided through careful measures, such as imposing conditions on the beneficiaries of debt mutualization. In addition, he believes joint-issued debt would solve the problem of weak sovereigns with the richer countries guaranteeing the debt of the weaker ones to a certain extent. He defines the main threat to the Eurozone as being mere fear and panic that can lead to a sudden increase in borrowing costs. On the opposing side, Mr. Belke believes that the flaws of mutualization are unavoidable and so the European Union should not resort to such methods. Instead, the E.U. should start with saving banks through stronger central management and shared-liabilities among certain banking sectors. His definition of the main threat also differs from Mr. De Grauwe. He claims it is the untimely removal of market pressure and talks about how debt mutualization will only add on a political backlash, related to the disproportionate liabilities put on creditor states.