On the European front, game of the week for the witless hacks is to push the "Germany isolated" meme, over the issue of eurobonds. It gives a nice "bif-bam" flavour to the reporting, where conflict must be invented to sustain the simplicity of the narrative, even if it does not exist.
The "isolated" meme is very prominent in the comic, the story highlighted by the reportage: "Germany again stressed its deep opposition to the idea of pooling eurozone sovereign debt through the introduction of eurobonds, which are supported by those in the pro-growth camp and Britain".
In other words – any sensible words – it ain't going to happen. This is a non-story which serves only to divert attention from the more substantive issues. And the reason it isn't going to happen is because it can't happen.
Delving into this issue, the blockages are fairly evident and fatal to the proposition. Firstly, as this policy brief makes clear, their introduction would require fundamental changes to EU treaties. Even if there was the political willingness for this to happen – and there isn't – there is no time. If anything is going to happen, it must happen soon.
Secondly, as if this was not enough, the adoption of eurobonds would breach Germany's basic law. For Merkel to get them through, she would need to change the constitution, requiring a two-thirds majority in parliament. In her currently weakened position, with a general election next year, she would not get it.
But nothing of this is new. The general issues were explored in some depth by the EU commission late last year on another of those infamous "communications" - COM(2011) 818 final. I remember the days when we would spend days poring over such documents, and more days writing a considered analysis. Nowadays, we have to take them on the fly, such is the pressure of events and the volume of material.
However, from its 38 pages, one learns that the idea of "stability bonds", and the COM calls them, were first discussed by member states in the 1990s when the Giovannini Group (which has advised the Commission on capital-market developments related to the euro) published a report presenting a range of possible options for co-ordinating the issuance of euro-area sovereign debt.
In September 2008, interest in common issuance was revived among market participants, when the European Primary Dealers Association (EPDA) published a discussion paper "A Common European Government Bond".
This paper confirmed that euro-area government bond markets remained highly fragmented almost 10 years after the introduction of the euro and discussed the pros and cons of common issuance. In 2009, the Commission services again discussed the matter of "common issuance" in the EMU@10 report.
COM(2011) 818 final, therefore, was the latest of a series of attempts over the course of more than a decade to resolve this issue. Crucially, it was one in which the commission remarked that many of the implications went well beyond the technical domain and involved issues relating to national sovereignty and the process of economic and political integration.
These issues, said the commission, included reinforced economic policy coordination and governance, and a higher degree of economic convergence, and, under some options, the need for treaty changes. There we have it again – treaty change. And is certainly the case that the option over which the media are currently braying would require treaty changes.
And, of course, "any type of Stability Bond would have to be accompanied by a substantially reinforced fiscal surveillance and policy coordination as an essential counterpart, so as to avoid moral hazard and ensure sustainable public finances and to support competitiveness and reduction of harmful macroeconomic imbalances".
Essentially, eurobonds would require the full and final degree of economic and political integration, which is what the Delors report was getting at more than 20 years ago, and the Werner Report was telling us in 1970 (below).
The idea that this is a quick fix that is going to resolved all in a rush in Brussels during today's European Council meeting is, frankly, laughable. As always, though, there is a strong element of political theatre, with Hollande marking his territory, but there is something ultimately juvenile in a press report
that tells you, "There is no sign that Germany is ready to soften its position … ".
This is not adult reporting. It is the stuff of comic book politics – but even tales of superheroes cavorting have more credibility.
Of much more interest is the dark game being played by the EU Commission. As reported by AFP
, Germany's EU Commissioner Gunther Ottinger has "insisted" that eurobonds should not be ruled out per se
"My advice to everyone involved would be not to rule out eurobonds fundamentally", he has told the business daily Handelsblatt
, adding with delphic ambiguity that it was "a matter of timing". Eurobonds could be the "keystone" to a new financial architecture, he says, but only once all eurozone countries had ratified a fiscal accord and were firmly on the path to consolidation, the commissioner said.
Reading between those lines, we can see the commission going for the main chance – the economic governance that it has always hankered after. But even he is not looking at an immediate solution.
But then Schäuble has it in one: "as long as each country is responsible for its own fiscal policy, it is out of the question that the entire bloc should shoulder the liability for a country's bonds", he says. Without economic governance, the eurobond is an absolute non-starter.
There really is no more to add. The rest is fluff.