Poland Begs Germany to Save Europe

Polish Foreign Minister Radoslaw Sikorski made an unusual appeal to Germany in a desperate attempt to get Germany to do more to save the eurozone from collapse. The Polish foreign minister said that a eurozone collapse was the biggest threat to the security and prosperity of Poland and that Germany must to more to ensure that Europe can prosper. Sikorski said that although a collapse of the eurozone was not inevitable, Europeans were currently "standing on the edge of a precipice". Sikorski also said that he was probably the first Polish foreign minister to "fear German power less than... German inactivity". Sikorski demanded that Germany take action to prevent the European sovereign debt crisis from worsening and said that Germany was the only country capable of preventing a disaster. Although Sikorski didn't say exactly what he wanted Germany to do in order to prevent a financial collapse of the eurozone, Poland is one of many countries to voice support for jointly issued eurobonds backed by all eurozone members. Such eurobonds would lower the borrowing costs of troubled countries like Italy, which saw its 3-year bond yield surge to nearly 8% during a Tuesday auction of 7.5 billion euros ($10 billion) worth of government bonds. The Polish foreign minister may have also been calling on Germany to allow the European Central Bank (ECB) a free hand to buy up an unlimited amount of eurozone bonds, which would further drive down borrowing costs across the eurozone but Germany fears could lead to rising inflation. ACTION ITEMS:

Bullish:
Traders who believe that being publicly called out by the Polish foreign minister will push Germany to do more to prevent a eurozone financial collapse might want to consider the following trade:

• The future of the euro currency itself is being called into question more and more each day. If Germany approves measures that calm the markets, the CurrencyShares Euro Trust FXE ETF could climb higher as investors' confidence in the euro is restored.

Bearish:
Traders who believe that Germany is already under so much pressure to do more that Poland's input will have little influence on its decisions may consider an alternate position:

• The ProShares UltraShort Euro EUO ETF could move higher if Germany's refusal to back the eurobond idea and unlimited European Central Bank bond purchases leads to the euro's demise.

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