So says Angela Merkel. The idea is that if only Europe will "centralize" fiscal decision making and commercial bank regulation," then Germany may be willing to participate in a Europeanization of member country debt. There are only two problems with this solution: 1) centralizing fiscal decision making makes no difference at all; 2) commercial bank regulation has never been known to prevent financial crises and bank failures. All this shows is that Merkel doesn't understand what the problem is. No politician seems to get it.
The problem is simple: the welfare state has undermined the fiscal health of the Eurozone. There are two reasons, both stemming the from the same principle: when you promise people that they can receive income and services without paying for them, then two things happen: 1) people quit working and saving to provide for themselves; 2) you have to borrow unlimited amounts of money to fund the promises that you have made to people since they no longer have any plans to provide for themselves.
No amount of "centralization" of fiscal decision making can possibly matter. This is an imaginary fig leaf designed to make sure that the ultimate collapse in Europe occurs after Merkel leaves office. It does nothing to prevent that collapse.
"Not on my watch" seems to be the only theme of European and US policy. No one seriously wants to tackle the fundamental problem. If you don't dismantle the welfare state, it will dismantle itself in a chaotic, dehumanizing way. We can see this taking place in Greece and Spain today. This same dismantling process will be visiting Illinois and California in the near future.
Contrary to the views of the Krugmans and Stiglitz's of the world, there are no simple answers that can turn "no revenues" into "revenues." Someone, somewhere, must foot the bill. Who is that to be? If I am not willing to pay for my old age and my medical care and my education, etc., then who pays? Bondholders?
Centralizing decision making and increasing regulation will have no effect on the European financial crisis, since it does not address the problems in the Eurozone. It simply provides politicians, like Merkel, cover while they prepare for their own comfortable retirement.