There is something odd about this argument. He seems to be saying that, in order to avoid a contingency that may not even come to pass, the EURO states must take an action that in all likelihood won’t be sufficient should that contingency actually occur.

Are TAF and TARP going to become household names, as in “Hey, I heard the First Federal just got a juicy piece of TARP last quarter…” Isn’t getting rid of the clusterf*** of extreme measures going to be an impossible legislative and regulatory feat? Can anyone imaging taking back from the Fed its new powers to oversee the broad financial markets, not just banks?

And who will administer this? Will countries get angry if they do not get as much money as they contribute? Let’s say a country as done a great job at regulating their banks. Do their citizens have to still pony up so the Belgians can save their banks? Doesn’t this create moral hazard? Shouldn’t the countries (if there are any) that did correctly regulate their banks be rewarded and not punished?

Where are the howls of horror at the EU becoming a “super state”?

I would certainly agree that general policy direction should be harmonized on the European level, but this already seems to be the case since banks are being bailed out by equity injections and not by blank checks. And one glaring deficiency is the lack of a proper deposit insurance regime. These rules should be set at the European level while being executed at the national level.

But there are just too many spineless Europeans that the moment the going gets tough look to their big brother America for all the answers. The only problem with this approach is that most of the problems (but not all) with European banks are directly related to Europeans not following their own traditional ways but instead being way too quick to jump into whatever new “innovations” are coming out of the States.

Given the political architecture of Europe, the best that can be hoped for is a continuation of the ad hoc solutions on a national level. Trying to do more than gernal policy direction on the European level will be too complicated and never work. On the other hand the EU leaders will take advantage of the current crisis to gain more power for the future.

I disagree because he suggests that the outcome of continuing under the same system is the worst case possible. The exclusion of all other possible courses of action and possible results leaves this as the most likely, by default. The implication is clearly that the eurosystem categorically does not work – a theme which he has been smacking about for a very long time on the basis of a wide range of evidence, but has yet to prove conclusively. I know that he hails from Munich, but I’d instead give his job description as British journalist.

I hardly read this as euro-bashing, but more as sound advice on how to act in the best European interst. Don’t forget that Münchau is a German economist hailing from Munich.

No… no… no… not that!!!!!