under different calmer conditions nobody will ever agree to do this.
But when they have seen the turmoil and chaos in Greece Spain Ireland and markets getting hammered taking haircut, there is desperation for some political solution and stability but instead at the twelfth hour being held over the cliffs again.
I think markets could welcome this.
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Personal opinion: (And NOT pinpointing anyone bcos I do not want anyone to get excited then jumpy about my reply)
Banking union without political union is like a toothless tiger.
There has to be a leader or a governing body of which who is to set all the monetary policies.
Else the Germans would just be giving money away to their Southern cousins while they scrimp and save.
If polticial union is also achieved, Hitler would have been so proud of Merkel. The head of the union would without a doubt be Germany, even if it appears not to be.
Just as who is the leader of NATO. Not France mind you. The French might kill me for this though!!
Heil Merkel!!
Devalued Euro is nice and good to Germany exports up to a certain point. If the alternative is working their arses off while supplementing the rest of EU nations' early retirement ages, I doubt any Germans would agree.
We can also touch on the rest of EU banks debts which are tied to Germany's banking system. Many have been said about Germany is saving her own banks by saving Greece and the rest. Perhaps true.
But how much of a limit would the Germans want to fork out? By tying herself immersely into the EU banking union, she becomes the lifeboat for all and also, will be drag down by the rest if another crisis erupt in the future. This is because the rating agencies would be looking at Germany as the union of all EU, all for one, one for all.
Above all, even if the Germans suffer a default on their debts bcos they revert back to Deutschemark, bcos the EU collapse and suffered a loss to German banks, would Germany still stand up strong?
The Germans are not known for their industrial strength for nothing. All engineers worth their salt would knw German heavy industrial machines are the best of their class bcos they damn well work at extreme conditions. Their exports would still be highly regarded, they will still stand proud within a decade of recovery.
For a very simple example: Would any Singaporean vote for a banking union with Phillipines? We have a currency exchange with Brunei 1:1 bcos they hv oil to supplement our financial system. Its a win-win situation.
But for Phillipines? Think about it. Then think again.
I suspect all along the whole idea of euro from beginning is domination of all the banks. As the conspiracy theorist would say once you control the money you basically run the whole house, governments will come and go who cares.
Thats why I say in calmer situations none of the european countries will ever agree to give up their house, who wants to do that? but now at a time when many are desperate jobless angry and going to see darker days ahead I read in spain 50% of their young people there are jobless.