November 26, 2011
The designers of the good ship euro wanted to create the greatest liner of the age. But as everybody now knows, it was fit only for fair-weather sailing, with an anarchic crew and no lifeboat. Its rules of economic seamanship were rudimentary, and were broken anyway. When it struck a reef two years ago, the water flooded one compartment after another.
“The situation is extremely serious, more so perhaps than at any point in the last 18 months,” José Manuel Barroso, the European Commission president, said this week. He announced two last-ditch initiatives to avert doom. One is a “green paper” on options for joint Eurobonds. To balance this mutualisation of debt, he also proposed stronger monitoring of national budgets by Brussels, including the right to recommend changes before they are submitted to parliaments, and fiercer oversight of countries “in severe difficulties”.
Renaming Eurobonds as stability bonds, the green paper is almost an act of insubordination against Angela Merkel, Germany’s chancellor. She is strongly against the idea and has also declared that only a treaty change can impose enough rules to ward off another disaster. Eurobonds and treaty change together just might make for a better vessel, but they would take years to put into effect. Why design a safer imaginary ship when the present real one is about to sink?
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