The issue of rising sovereign bond yields, not just in the euro zone, but across the Western world, will be one to watch in the New Year. ++ However, governments are in a position to minimize this volatility. ++ The United States should complement its short-term tax cuts with an agreement on medium-term deficit reduction. ++ Japan needs to overhaul its taxation system and kick-start growth. ++
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“The time for stumbling through the euro crisis is over.” ++ A radical, targeted effort is required to protect the future of Europe’s common institutions. ++ The path to this involves tough, yet practical solutions: the creation of Europe-wide bonds, harmonized tax rates and “haircuts” for the holders of sovereign debt. ++ Greater EU political integration is required for this. ++ Germany has been
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