The FT’s distinguished columnists are fearing for the worst as they look at the Eurozone debacle unfold. And, of course, many of them had glowing words to say in favour of the whole idea when it was set up.
Wolfgang Münchau gives more doom-laden analysis today (tuck’d away behind the FT paywall if you’ve used up your free article quota for the month). But in it there is this truly startling, nay amazing passage (my emphasis added):
The way eurozone leaders have been handling the crisis ultimately vindicates the German constitutional court’s conservatism in its definition of what constitutes a functioning democracy. Policy co-ordination among heads of state is both undemocratic and ineffective. A monetary union may require more than just a eurobond and a small fiscal union. It may require a formal, if partial, transfer of sovereignty to the centre – that includes the rights to levy certain taxes, impose regulation in product, labour and financial markets, and to set fiscal rules for member states.
Under normal circumstances, European electorates would not accept such a massive transfer of sovereignty. I would not completely exclude the possibility that they might accept it if the alternative was a breakdown of the euro. Even then, I would not bet on such an outcome. Current policy is leading us straight towards this bifurcation point, which may only be a few weeks or months away.
Remember this analysis back in 2008 that the European Union is a ‘post-democratic’ phenomenon? Thus:
There is a serious question here as to where the EU stands on Democracy. The EU Project lumbers on, Liberal but not Democratic, knowing that if key aspects of the project were put to referenda they would be rejected and not just in the UK.
Mr Münchau is, of course, right. To have tired heads of government and states who themselves barely understand the issues horse-trading the rights and responsibilities of hundreds of millions of people is ‘undemocratic and ineffective’. Worse. It’s dangerous.
European leaders and their clever formalistic functionaries have created a structure which is now not able to work except by tottering along a policy tight-rope that gets higher and thinner as each day passes. It is hard to see how the radical centralisation of crude power needed to keep the show tottering on can be reconciled with any idea of popular democratic legitimacy as it has evolved in Europe since WW2. The rambling debate in the UK Parliament today is a sign that the mood is changing fast, whatever the result of the vote tonight.
Loath as I usually am to agree with Paul Krugman, he lays it on the line here:
All the various proposals for creating such a fund ultimately require backing from major European governments, whose promises to investors must be credible for the plan to work. Yet Italy is one of those major governments; it can’t achieve a rescue by lending money to itself. And France, the euro area’s second-biggest economy, has been looking shaky lately, raising fears that creation of a large rescue fund, by in effect adding to French debt, could simply have the effect of adding France to the list of crisis countries. There’s a hole in the bucket, dear Liza, dear Liza…
The bitter truth is that it’s looking more and more as if the euro system is doomed. And the even more bitter truth is that given the way that system has been performing, Europe might be better off if it collapses sooner rather than later.
When the EU elite loses the confidence of powerful world-class experts like these, something quite extraordinary is happening. Fast.