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Published: Tuesday, 8/23/2011

Meeting of the minds

Last week's meeting of French President Nicolas Sarkozy and German Chancellor Angela Merkel offered an important note of stability in the cacophony of trans-Atlantic financial developments.

At least three members of the euro zone -- Greece, Ireland, and Portugal -- have shaky finances. The much larger economies of Italy and Spain might also be on the skids. The U.S. and European economies are closely intertwined: Europe buys almost 25 percent of America's exports, and Europeans hold $479 billion in U.S. debt.

Ms. Merkel and Mr. Sarkozy lead Europe's largest and strongest economies. They are clearly devoted to fixing the euro zone's problems. There wasn't even a whisper of a possible breakup.

This is to America's advantage. It might be nice not to hear any more threats that, because of the U.S. government's financial irresponsibility, the dollar might be replaced as the world's favorite currency. But a weakening of the euro would not help the United States.

Trying to disaggregate the global economy would be like unscrambling an egg. America benefits from a strong Europe, and is better off with the euro as an alternative world currency. The Chinese yuan won't cut it for many years.

In that context, the emphasis of the two European leaders on economic growth in the euro zone, along with greater budget discipline and debt restraint, was both a warning to the weak countries and good advice to the United States and Europe.

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