EU Charity Likely to Begin at Home - by Allen Mattich

Every grain of news coming out of the euro zone's periphery suggests the inevitability of sovereign default by Ireland, Greece and Portugal. And this can only mean a massive recapitalization of core Europe's banks.
To be sure, Germany and other Northern European countries will battle hard to avoid both. But in the end, political barriers will prevent them from engineering the sort of transfer payments necessary to lift the huge debt burdens off the euro zone's beleaguered fringe. The transfer payments will instead be made to their banking sectors, with the quid pro quo of much tighter regulation.

Ultimately, politicians in Germany and the rest of affluent Europe will have to accept that one way or another they'll be sharing the costs of the peripheral European readjustment. The question they will then need to answer is whether it's more palatable to hand the money over to peripheral European countries or to their own banks.

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