Though Merkel, head of the conservative Christian Democratic Union, was forced into awkward compromises on taxes and welfare-state reforms, her 'country looks like a rare island of stability' in troubled times like these.

Accroding to Newsweek, 'There's no housing or credit bubble, and the savings rate puts America to shame (11 per cent 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.'

Photograph: Reuters/Johannes Eisele/Files

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