As it stands, the single currency has become a doomsday machine, driving Europe and the rest of the world ever closer to financial collapse. Can it be switched off in time? So far, the signs are not encouraging. As The Daily Telegraph reported last weekend, there is a “grand plan” for saving the euro circulating within the G20, involving a bigger bail-out fund, the recapitalisation of Europe’s banks and a Greek default on realistic terms. But this has already run into the immovable object of the German veto: Wolfgang Schäuble, Angela Merkel’s finance minister, dismissed it out of hand.
In the markets, there is a widespread assumption that Schäuble doesn’t really mean it – that when push comes to shove, and today’s vote in the German parliament on last summer’s rescue package is safely out of the way, he’ll do whatever is necessary. But if he does, he’ll almost certainly lose his job, and very likely pull Germany’s coalition government down with him. A financial crisis will have been transformed into a political one, and the democratic deficit at the heart of the European project will have reached new bounds.
No one can be in any doubt about where this is all heading.