I'm impatient to know what is going to happen to Europe. It matters to all of us, insofar as Europe plays an important part in the global economy, and it matters particularly to those of us who live in Europe, or intend to live in Europe, or who simply cherish an idea of Europe (for ethnic, cultural, intellectual or other reasons).
The Economist's Charlemagne gives a good account of the background to and the prospects for a new treaty. In fact there are two treaties being negotiated: the new intergovernmental treaty associated with the recent Brussels summit; and the not-so-new but yet-to-be-completed treaty setting up a permanent bailout fund (the European Stability Mechanism). These documents appear to be crystallizing not only a two-tier E.U. but also a two-tier euro zone (with debtor countries lacking veto powers, for instance).
But will the markets wait for the bureaucrats and politicians to complete their ambitious agenda of drafting and ratification? Will the temporary rescue fund, the European Financial Stability Facility, prove to be adequate (in conjunction with other funding sources like the IMF)? In the absence of massive bailouts (which can create their own problems), it's difficult to see how heavily indebted countries will be able to come out of this without devaluation (which would entail exiting the euro zone).
Particularly interesting, in the light of my recent reflections on dealing with decline, are comments by Johan Van Overtveldt who, in a new book (The End of the Euro) singles out France for special criticism. "France's inability to accept gracefully its political and economic decline has produced additional tension. La grandeur de la France, once an undeniable reality, is now a thing of the past."
Recent statements by French leaders attacking the creditworthiness of the U.K. were so far beyond the pale as to indicate a degree of panic.
And no wonder, with the ratings agency Fitch saying that "a comprehensive solution to the euro-zone crisis is technically and politically beyond reach," France's triple-A status on the brink of a downgrade - and a French presidential election just a few months away.
One last quote. On a Sky News Christmas special pre-recorded last week, Sir Philip Hampton (the Royal Bank of Scotland's chairman) said he thought the banking system could cope with Greece's exit from the euro zone, but he had broader concerns about social cohesion, even in France. "France has got an unmatched history of getting on to the streets and making a big noise. I'm amazed the French have been so subdued. I don't think it will continue."
If the French do take to the streets, let's hope the Islamists don't hijack the revolution. That would be an interesting twist.