Europe could strengthen its monetary union by giving European politicians the power to declare a sovereign state bankrupt and take over its fiscal policy, the former head of the European Central Bank said on Thursday in unveiling a bold proposal to salvage the euro.
That’s an open declaration of war and should be responded to in kind.
There is no power superior to that of the budget within a nation. None.
If other nations and firms don’t like a government’s expression of their sovereign power in the form of their budget they have the right to refuse to lend to it. But there is no claim one can make on a sovereign’s budget on a forcible basis — that is functionally identical to an invasion.
Trichet has just invited a shooting war in Europe, and I predict that if this sort of meme spreads he’s going to get exactly that.