Right now everyone sees the need for a large, pan-European fiscal stimulus.
Everyone, that is, except the Germans. Mrs. Merkel has become Frau Nein: if there is to be a rescue of the European economy, she wants no part of it, telling a party meeting that “we’re not going to participate in this senseless race for billions.”
Germany’s leaders seem to believe that their own economy is in good shape, and in no need of major help. They’re almost certainly wrong about that. The really bad thing, however, isn’t their misjudgment of their own situation; it’s the way Germany’s opposition is preventing a common European approach to the economic crisis ...
a coordinated stimulus effort, in which each country counts on its neighbors to match its own efforts, would offer much more bang for the euro than individual, uncoordinated efforts. But you can’t have a coordinated European effort if Europe’s biggest economy not only refuses to go along, but heaps scorn on its neighbors’ attempts to contain the crisis.
Krugman goes on to argue that the German opposition is unlikely to last, but that a delay could prove damaging.
The point that a coordinated fiscal stimulus would prove much more effective has been a central argument of Gordon Brown's from the start of the crisis.
On his blog, Krugman provides some maths to demonstrate the scale of the difference which coordinated action could make.