And so far, where Greece has been led, others have followed…
But, for some, every cloud has a silver lining.
“Would it go too far if we envisaged . . . giving euro area authorities a much deeper and authoritative, say in the formation of the country’s economic policies if these go harmfully astray?” asked [European Central Bank president, Jean-Claude Trichet], suggesting “a direct influence, well over and above the reinforced surveillance that is presently envisaged?”
Mr Trichet’s proposals – carefully phrased as hypothetical ideas – came in a speech in Aachen yesterday where he was awarded the prestigious Karlspreis for services to European unity.
The central banker’s boldest suggestion was a “new concept” for the euro zone that envisioned cases of “compulsory” intervention from EU leaders and the ECB in “major fiscal spending items and elements essential for the country’s competitiveness”.
“Confronting the challenges of the future requires strengthening the institutions of economic union – the ‘E’ in EMU,” he said. “Would it be too bold, in the economic field, with a single market, a single currency and a single central bank, to envisage a ministry of finance of the Union?”
As the BBC’s Europe editor Gavin Hewitt points out
Although he argued the precise opposite, the speech was a tacit admission that neither monetary union as it currently functions, nor the bail-outs that have followed, are working satisfactorily.
In his view, rules governing spending within the eurozone need to be tightened.
There are already plans for monitoring and peer review but Mr Trichet has in mind something “well over and above the reinforced surveillance that is presently envisaged”.
When it comes to countries that have been bailed out but are still failing to get their deficits down he proposes that European officials essentially make the spending decisions on behalf of that country.
“One way this could be imagined,” he said, “is for European authorities to have the right to veto some national economic policy decisions”.
A vein running through this speech is the belief that governments can’t be trusted with spending while officials can.
In this vision citizens and voters don’t appear to have a seat at the table.
As Gavin Hewitt also points out
Trichet’s vision would require a change to the treaty. There is little appetite for that amongst member states.
Eight years were spent haggling over the Lisbon Treaty. Treaty change would trigger referenda and, in the present climate, it is not certain that Europe’s voters would back more power shifting away from the member states.
It has long been said that you can’t have monetary union without fiscal union. And you can’t have fiscal union without political union.
Jean-Claude Trichet clearly believes that.