Today’s Paris summit on the eurozone crisis will be another exercise in deferral. Angela Merkel and Nicolas Sarkozy will tweak the terms of the rescue package required to prevent countries like Greece from defaulting, but they may as well be rearranging the deckchairs on the Titanic. Meanwhile, the single currency steams on towards the iceberg, threatening to tip all of us into the abyss of worldwide economic depression.
The eurozone has become a de facto debt union, stronger members taking on the liabilities of weaker members’ sovereign debts. The European Central Bank is financing states through its purchases of government bonds. It cannot go on like this. Why should Germany underwrite Europe’s debts if it cannot take effective control of the weaker economies? Ultimately, either the fiscally profligate nations must leave the eurozone and devalue their currencies, or there must be harmonisation of economic policy across all the member states. The devil or the deep blue sea?
The possibility of issuing eurobonds is no longer whispered guiltily in corridors. Even George Osborne has said it’s worth examining. The introduction of eurobonds, however, clearly implies some form of fiscal union with central control of taxation and spending. That way madness lies. The people of Greece, Portugal, Spain, Italy and Ireland will never permit their sovereignty to be undermined in such a way. NEVER! Failure may be embarrassing, but it’s better than demonstrating blind faith in the eurozone and, like Captain Smith, going full steam ahead at the iceberg.
Disintegration is the only rational solution. There may still be time to effect this in an orderly way. Man the lifeboats!
