The eurozone crisis shows no sign of diminishing. So far we have Ireland, Portugal, Italy, Greece and Spain well in the mire with France and Belgium heading towards the swamp. EC commissars along with Merkel and Sarkozy issue bellicose statements interspersed with pleas for the 'vision' of an integrated Europe.
Update: French credit rating worries:
Prime ministers of two countries, Greece and Italy, have been replaced by EU selected technocrats and in order to achieve this threats have been issued to the elected politicians of the two nations' parliaments.
As for democracy: the lights are going out all over Europe. Referendum results have been ignored by the EU, or, as in the case of Ireland have been re-run to secure the 'right' result for the EU. Nothing is permitted to stand in the way or challenge the hubris in Brussels, Berlin and Paris (aided and abetted by some of the other eurozone countries).
Despite all the threats and interminable summit meetings contagion is spreading: there are too many fires to put out. The spectre of recession across the whole of the EU looms large. For the basket cases in the eurozone the concoction of austerity + recession will deliver the fatal blow. At least the UK can mitigate the problems it faces through interest rate adjustment, quantitative easing and a floating exchange rate. Such options are not available to Greece, Italy, Portugal etc, etc.
The mantra is closer fiscal and political integration. Of itself such integration will achieve little, the problem of uncompetitive economies in Greece and Italy will take years to overcome.
What is required is for the European Central Bank to have the same powers as the USA Federal Reserve or the Bank of England: the power to engage in quantitative easing, to issue eurobonds, to buy sovereign debt. Political decisions have to be taken, not simply to provide funding to meet the debts of countries with struggling economies, but also asset transfers to develop their economies. In a unified fiscal and political eurozone debt-pooling may be necessary. See:
All this is anathema to Germany, haunted by the hyper-inflation of the 1930s and the political consequences. But, unless something is done we shall witness civil unrest and upheaval across Europe as disenfranchised citizens resort to such action.
It may just be that we are witnessing the beginning of a change in the German approach. It is being suggested that significant amendments may be made to the German Basic Law which limits loss of sovereignty. The decisions of the German Constitutional Court in respect of the Lisbon Treaty and more recently on German participation in bailouts, enforce the Basic Law and act as a straitjacket limiting the power of the German government.
Mrs Merkel said today that Europe is facing its toughest hour since the Second World War and that she said:
If the euro fails then Europe fails, and we want to prevent and we will prevent this, this is what we are working for, because it is such a huge historical project."
Is the German public been softened up for a major change of direction? May be, but then again.......
Constitutional change in Germany?