Euro Zone Bond

This is the latest idea for bringing a more uniform approach to sovereign debt, supported by some countries but opposed by Germany. So that is that. Even more so, if non- euro members of the E.U. were to be asked to guarantee such a bond. There is absolutely no chance of the U.K. agreeing.

For the moment the pressure has eased and Euro finance ministers are cautiously optimistic. Stock markets have recovered from their fright of two weeks back when Ireland was on the brink. But for how long? The problems remain and remain the same. The Euro has a central bank, but no unified government. It has no common economic policy; only various rules, which are regularly violated by its members when the fancy takes them.

There are two options ahead, neither of which is accepted by those in the zone. Without a unified system of economic management the Euro will eventually conk out. The other is that such a system is put in place and the Euro is secured. It has to be either the one or the other. Well not quite.

There is a third option. Nothing is agreed but, bit by bit, everybody has to go with whatever Germany wants, because it is the paymaster and it is calling the tune. The Euro has always been Germany’s currency shared, but now it will begin to claw back control. Indeed it has already begun to do so. Thus the Euro will have a central government and a unified economic policy but it will be in Berlin.

Those who gain advantage from this will remain. These will include the smaller countries and the old communist states of the east. The others, including the Mediterraneans like Spain, Greece,  Italy and Portugal will leave. So may Ireland. The interesting one is France. If she stays there will be a Franco German dominance. If she goes, there will be German dominance on its own.