The key point to understand about the current round of efforts to get the latest (July’s) Eurozone bailout approved is that it is (in a sense) merely an attempt to build (and pay for) the stable door through which the horse has long since bolted. If there is one thing that has become obvious since July, it’s that the package negotiated that month will not be enough to stop the panic now engulfing the Eurozone. The chaos of the weeks that have followed has, however, also shown that agreeing a new, even larger deal will be almost impossible. That leaves the last line of defense with an European Central Bank that is itself under fire and holding less ammunition than is sometimes assumed.
Ambrose Evans-Pritchard discusses these issues in the Daily Telegraph here. His conclusion is that Germany’s parliament, like its consttutional court, has reached the limits of its patience, and that this means:
THERE WILL BE NO FISCAL UNION.
THERE WILL BE NO EUROBONDS.
THERE WILL BE NO DEBT POOL.
THERE WILL BE NO EU TREASURY.
THERE WILL BE NO FISCAL TRANSFERS IN PERPETUITY.
THERE WILL BE A STABILITY UNION – OR NO MONETARY UNION.
The caps are Evans-Pritchard’s. Noone has ever accused him of being an understated writer.
His general conclusions may be correct and I suspect that he’s right to think that (crucially) Germany’s constitutional court is at the end of its tether. Nevertheless, it’s too soon to write off the willingness of Germany’s political class to do its best to sell its taxpayers down the river. An increasingly large number of the governing coalition’s MPs may have had enough of the current farce, but there are enough euro-federalists in the ranks of the opposition to tempt Mrs Merkel into an attempt to cobble together yet another “rescue” plan. The bloggers of Open Europe have a good summary of the state of play within the Bundestag here.
Meanwhile, as Evans-Pritchard notes, “Germans have begun to sense that the preservation of their own democracy and rule of law is in conflict with demands from Europe”. He argues that ”they must choose one or the other.”
The all-important question is whether they will be given the opportunity to do so.