European Union leaders disagreed over this weekend's EU summit after a proposed plan by Germany to increase the competiveness of EU nations on the periphery ran into a roadblock.
In exchange for increasing the European Financial Stability Facility (EFSF), Germany proposed increasing the retirement age in the euro zone, ending the indexing of wages to inflation, and synthesizing taxes at both the individual and corporate level across EU member nations.
As expected, many of the periphery nations disagreed with the proposals that were supported by both Germany and France as the proposed legislative additions to the EFSF goes against many of the social welfare principals that the EU nation's governments are built upon. Harsh criticism was received from Spain, Portugal, and Austria.
The disagreement among EU members headlines the risk in the euro as the European debt crisis remains largely unresolved. However, traders have been willing to look beyond Europe's fiscal difficulties and a lack of a political solution while focusing on rising interest rate differentials between Europe and the rest of the developed nations that are still carrying out dovish monetary policies.