This Thursday and Friday’s EU summit is the 20th since the start of the financial crisis, yet it seems we are back at square one.
Banks are again in danger of collapse, capital is flying out of the weaker members, and at least two more nations stand on the brink of bailout.
Yet in just a few hours Germany’s Angela Merkel looks ready to repeat in Brussels that she will only consider making Italian and Spanish borrowing cheaper by assuming joint liability of EU member’s debt at a price; controls on budgets and economic policies. That will mean a tight squeeze for some.
“I say we need more Europe and I think that we agree we need a Europe that works – this is what the markets look at. And we need a Europe where countries help each other, this is the spirit in which we work,” she said in Paris in pre-summit talks with French President François Hollande.
One short-term fix that may be approved is the so-called Tobin tax on all financial transactions.
“We believe that if there is enhanced tax cooperation bringing to the adoption of a financial transaction tax, say at the Euro Area level, then that should go hand in hand with other aspects of enhanced cooperation,” said Italy’s Prime Minister Mario Monti.
However Europe’s grandees and the markets know a long-term solution is needed sooner or later. France is championing Eurobonds, something Merkel says she does not expect to see in her lifetime.