Nicolas Sarkozy, French President, said: "We want, in essence, that the malfunctioning that led to the situation of the Eurozone today can never happen again. This is what Germany and France want: that what happened can never happen again."
Angela Merkel, German Chancellor, said: "I've always said that the 17 Eurozone countries must restore their credibility. And I think with these new measures we can and will do just that. "
So there are 17, 26 and 27 members in different layers of the union. In addition, the latest grand bargain, lauded by Merkel and Sarkozy, may take until March to negotiate. Then all the new members (26) have to ratify.
This fiscal outcome of this confusion of laws seems to be going the way of sub-prime mortgage lending, when banks admitted inability to price their sliced up piece of mortgages. This time it is (former) nations of Europe, rather than banks that may go bankrupt, with the additional inter-national acrimony resulting from basic inability to establish facts, such as who owes who. For example, are the Germans going to be repaid for bailing out Greece, through ECB or any other mechanism? Will Greeks 20 years from now consider that a legitimate debt, or will the (rightly) state: We didn't ask for it, we didn't want it, we reject responsibility for this debt.
On the bright side, even if things go smoothly between nations, the interaction and conciliation of different laws is going to keep a generation of lawyers employed in each nation.
The real travesty of this situation is the Lie I mentioned in the beginning, namely that there is a strategy in place. All there is, are words. An agreement, to reach an agreement. To adjusting rules on the fly, during a crisis. To top if off, what Merkel's old insistence that EU members promise to maintain fiscal discipline, is market as a 'strategy' and a 'solution'. As I described previously, latest debts have resulted primarily from import-export disbalances of countries with a single currency so to pretend that a mere promise can address this fundamental problem is to Lie.
It is anyone's guess to what extent these lies result from ignorance or malice. In other words, are they fooling us, or do they really don't know any better? As bad as lying is, the alternative explanation of economic illiteracy at the very top of European leadership, which is shaping a common future, may be worse. When dealing with an idiot and a cheat, pick the cheat, who's at least predictable.
The further things go EU goes down this road, the more entangled the financial mess will become. The one innovation proposed in the new treating is the creation of a centralized, EU-wide taxation.
This caused two of the more sceptical nations amoung the core 26, Hungary and the Czech Republic, to say in a recent joint conference in Budapest they were ready to reject the planned treaty, with the Czech prime minister Petr Necas saying, they are “convinced that tax harmonisation would not mean anything good for us."
EU will become the Gordian knot holding the Suicide Pact together. UK will be seen as fortunate for its early escape form the impending mess. Those who delay the inevitable because of wishful thinking increase the cost to their nations.
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