As leader of the world's fourth most powerful economy, Angela Merkel has resources few of her peers can match in this crisis. Germany's slow-and-steady economy may have seemed boring in the global boom years, but now Merkel's country looks like a rare island of stability. Government budgets are balanced. There's no housing or credit bubble, and the savings rate puts America to shame (11 percent versus near zero last year). It all lends authority to Merkel's warnings against "cheap money" and a "senseless race to spend billions" trying to stop the downturn. The question is whether Merkel can parlay Germany's relative strength into greater European prominence for herself. The continent's leaders seem to like nothing better than a good fight, despite all their rosy talk of how the crisis has vindicated Europe's model of a kinder, gentler capitalism. Meanwhile, the chancellor will be busy with a fight of her own as she heads toward Germany's September 2009 national elections.
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