Interesting vignette visiting Germany recently and out at dinner in Hamburg. A group of oldsters was having a smashing night out together – about a dozen of them. When it came to settling their bill I noticed that they all paid individually and they all paid in cash. A micro picture of course, but it struck me that this small example illustrates the German pre-occupation with being able to pay your way. None of these individuals wanted to increase their debt by using a card. Nor would any of them have dreamed of printing the money required to pay for their meal.

This is the real dilemma at the heart of any deal to “save the Euro”. Nevermind the histrionics around Cameron’s exercise of the UK veto in relation to greater fiscal union. It doesn’t matter what institutional fiscal changes the Eurozone introduces going forward. What matters is dealing with the present unsustainable level of Eurozone debt right now. Germany will neither underwrite such debt nor print money to address it. Unless some other mechanism is found to defray such debt (e.g. significant IMF money) the markets will continue to take a sceptical view of the likely survival of the currency…