The 1 chart that shows why Germany wants to save the euro … and the 1 chart that show why it might not

By James Pethokoukis

Project Euro is about economics, of course, but not just that, as JPMorgan’s Jim Glassman notes:

Its driving forces have deep historical roots in a century of devastating conflicts (the illustration of war casualties on the following page underscores that trauma) and they are fueled by the enormous economic benefits that come from strengthening economic integration: the efficiencies that members receive when trading with each other by focusing on their comparative advantage; the leverage members gain by locking arms when operating in an increasingly competitive global marketplace.

Certainly, Europe doesn’t want a return to this:

So why doesn’t Germany get on board with empowering the European Central Bank to start a bond buying program as lender of last resort? This next chart shows another German memory:

Glassman’s conclusion:

There is no quick and easy way to deal with Europe’s liquidity crisis. The European Central Bank likely will have to step in to be the bridge, at least for a while, to a fundamental improvement in Europe’s unification process. This will be a difficult politically, but there are few viable alternatives. Given the threat of the financial crisis to the economic health of the region, however, and in turn that impact on inflation, the ECB could connect such activities with its inflation mandate. The ECB surely has the tools to deflate the region’s brewing crisis of confidence and liquidity crisis. Stay tuned.