Only a 'big idea' can save Europe
Like all systemic catastrophes, Europe's existential crisis will ultimately only be resolved by one "big idea". So far, our cautious political "herd" has failed abysmally to find that "idea". Change may be at hand, for, increasingly, the debate about austerity versus stimulus and Mrs Merkel versus Mr Hollande is failing to disguise the dirty little secret lying at the centre of the current chaos. Europe's trauma is the direct consequence of the collective decision by fearful politicians to protect the continent's banking system at the expense of its citizens.
Ironically, our undesirable status as a fiscal laboratory means we possess a unique insight into the consequences of such deceit. At the beginning of the great Irish disruption, the most common question was whether one bank could bring a country down. We were to subsequently discover, after AIB and Bank of Ireland put their shoulders to the wheel, that the debts of three rotten banks were more than enough to destroy the independence of the Republic.
It is now only a matter of time before Europe, like us, will be forced to admit that the only solution to this crisis is the "reform of the banks, stupid". But the reasoning behind austerity resembles the trapped animal that secures immediate survival by gnawing off its leg at the long-term price of bleeding slowly to death. In Europe's case, this consists of the destruction of the lives of our citizens who are unemployed, or alternatively condemned to a lifetime of being peons to our banking system. And sadly, in a scenario where stimulus on its own is inapplicable because of the burden of existing debt, the current move towards lukewarm austerity, with a drizzle of stimulus, will also not work, for the markets will simply "spit out" a solution which is neither "hot nor cold".
For now, the invisible power of the banks means even Germany has replaced moral hazard with a new form of carrion capitalism where the banking system feeds on the stricken taxpayer. But, as the Irish economic experiment shows, the transformation of banking debt into sovereign debt is an error of "South Sea bubble" proportions. Instead, the only solution to the current crisis is a cross-governmental response to the bankruptcy of the continent's banks on a similar scale to the Marshall Plan. This emphatically does not mean, however, that we should simply flood the banks with equity. Instead, unless moral philosophy is to be totally banished from governance, the carrot of cash must be accompanied by a large and varied stick of reparations so as to finally teach these bankrupt oligarchs that their proper place is one of servitude.