Today the Leaders of the Euro zone should be meeting to sort out their position ahead of another week when the markets can test their approach to country debt. Instead, they are keeping their disagreements to the beach and to the odd phone call.
My best advice to them is to split up the Euro zone before it does more damage. That is not their view, so the following agenda sets out the minimum they need to consider and decide to keep their zone going.
The Agenda should include:
1. Progress to proper supervision of spending and borrowing levels in each member state, with revised credible plans for those borrowing too much.
2. Treaty changes and legislation needed to legalise transfers and enforced supervision of budgets.
3. The role of the ECB in buying in bonds that have deviated too far from the average borrowing rate, and the scale of the operations needed to do this. Is further share subscription to the ECB needed?
4. The role of the ECB in supervising member states commercial banks. How will the lender of last resort facilities operate at a time of stress?
5. The size, scope and use of the European Financial Stabilisation Mechanism and fund.
6. What use will be made of Euro bonds issued in the name of the Euro authorities?
7. The likely future extent of transfers needed from the richer to the poorer parts of the Union.
8. Who will speak for Euroland and ensure the communication of a strong, consistent and plausible message based on these decisions?
There is no need for the UK and other non Euro members planning to remain outside the scheme to be at this meeting. The Uk should send a message wishing them success in their deliberations, and reminding them that the UK will want a looser arrangement with the emerging Euroland central government as its price for agreement to all this, to be negotiated as soon as Euroland has these decisions in place.
It would of course be sensible to discuss first if they want to carry on inflicting so much economic and pain and cost on the zone, or if it might be better to drop some members out now whilst they still can. There seems no wish to even discuss this.