She is right on the money.

The Telegraph - "If you look at the development of unit labour costs between Germany and France, differences have now been growing a lot more strongly, a topic that must be discussed," Mrs Merkel said.

She is right. I have been writing about this since 2003. This is the main problem. Most European countries have low productivity growth and this raises their unit labor costs - making them uncompetitive relative to Germany.

This is the main reason Germany has a current account surplus and the countries in trouble have a current account balance in deficit. These countries owe money they had to borrow to compensate for their inefficiencies. This is also our predicament.

And now they are finding out the do not have any money to repay the creditors.