The French President’s plane was struck by lightening en route to meet Mrs Merkel. Was it some music of the spheres, some intervention of chance or the gods, to herald the crisis Euroland now faces?
They needed all the time together they could get, to mend fences, and work out how to respond to the failure of the Greek politicians to form a government. They needed time to discuss how the EU should handle the forthcoming Greek election. Should it be made a referendum on belonging to the Euro, with the public told the conditions that are attached? Or should the EU keep out, and let all parties pretend there can be a renegotiation of sorts, that the terms of membership and of the loans are flexible?
Recent Euroland elections have underlined how little power old and the new governments have within the semi disciplined framework of the Euro. Government A is thrown out for playing by the rules, only to be replaced with Government B who also has to play by the same rules and offer the same policy. Membership of the Euro has been lethal for incumbent governments in recent months. Now Mrs Merkel herself faces voting meltdown, as Germans too grow weary of the current system.
Meanwhile, in the real world of the technocrats, Central banks and bureaucracies of Europe, there are grave nagging doubts and fears. Germany is worried that so much of her money has been deposited by commercial banks with the European Central Bank. The ECB has lent this on to the struggling banks elsewhere in the Union. The ECB now makes the interbank market for many, as the markets themselves are too apprehensive to work well. Technocrats worry where the next government will come from in some countries to carry on approving and passing the necessary measures to comply with the plan.
German taxpayers are worried about the potential liabilities under the various bail out funds, and many dislike the idea that the southern states will now flex the German credit card more. Meanwhile southern resentment and disappointment mounts, as their economies fall.
The new leadership of Merkel as modified by Hollande, will probably talk more about growth – which is much needed. They will probably offer a few extra spending programmes from the European Investment Bank and some under raided EU budget headings. Meanwhile, the true battle of the gods will be the battle over the banks. Can the ECB keep on providing enough money to the banks in the weaker areas? Will the weak banks hold on to enough deposits? Will the rescuers have enough money to pay for past losses? It all gets much dearer and scarier if the southern economies continue to decline. That will mean lower asset values and more exposed banks. If the Greeks act irresponsibly in Euro terms they threaten the structure without willing the answer, their own exit from the currency.
The latest phase of the Euro crisis is the battle of the banks. Mrs Merkel and Mr Hollande have to be more than passive bystanders arguing over a Growth Pact.