Euro

Either Sarkozy or Hollande will win France’s presidential elections, but the project of European cooperation and integration will surely lose. And the political uncertainty dominating the coming months will exacerbate the euro crisis.

As the eurozone crisis has now seemingly calmed down and my friend’s updates become more ecstatic by the week, I am afraid that we are edging ever closer towards his dream scenario. To most Europeans, bankers excepted, it may actually seem more like a nightmare.

To escape from its current mess, Greece does not need more Sisyphus work. It needs someone to tackle the Herculean task of cutting the country loose from Europe’s monetary union.

Draghi’s central bank thwarts any attempts at economic reform by taking yields pressure off periphery governments. It keeps a terminal monetary union on life support without curing its many diseases. It creates vast amounts of money which one day may well create inflation outside asset markets, where it is already underway. And it is an imaginative monetary scheme that keeps on giving as long as the next shot of monetary stimulus is in sight – but not a single day longer.

Berlin is only focussing on the fiscal crisis since it does not want to change its own ways. But as long as the Germans are unwilling to accept that they are part of the problem they cannot offer workable solutions to others.

Europe has run out of easy solutions to its many simultaneous crises. When it runs out of money to even buy itself more time to gloss over the symptoms of a dysfunctional monetary union, perhaps European leaders will finally start tackling the underlying problems. Time has become unaffordable

In a more optimistic scenario, European politicians would realise that the euro cannot be saved and stopped pretending otherwise. But perhaps it is already too late for such naïve Christmas wishes.

If newspaper reports over the weekend are to be believed, German chancellor Angela Merkel and French president Nicolas Sarkozy are preparing a new eurozone stability treaty. Such news would almost be funny were it not for the seriousness of the euro crisis.