This would entail the member countries adapting "the retirement age to demographic trends" and introducing financial policy rules that are modeled after Germany's so-called debt brake (an amendment to Germany's constitution that requires the government to virtually eliminate the structural deficit by 2016).

So increased retirement age (because that is what it means) and an end to structural increases of private wealth (if I understand modern monetary theory right). Sounds bonkers to me.

Add a process where the only institution directly elected for the purpose of being a European institution - the parliament - appears completely sidetracked, and the economic government of Europe will be run solely in accordance to the will of those able to buy the most expensive lobbyists.

Sweden's finest (and perhaps only) collaborative, leftist e-newspaper Synapze.se

This is Germany's standard operating procedure, and it's getting rather tiresome.

Keynesianism is intellectually hard, as evidenced by the inability of many trained economists to get it - Paul Krugman

EU started work on Brady plan for Greece

Angela Merkel's new strategy seems to be to accept the need for an economic government of the eurozone, but to ensure that it deals mostly with macroeconomically irrelevant issues. Der Spiegel has some concrete details of what Merkel actually means by a common economic government. It turns out the big idea is the harmonisation of the pension age (something not really necessary given that pensions systems remain nationally funded, and very different in structure.) Merkel also wants the rest of the eurozone to adopt Germany's version of a debt-brake, a self imposed balance budget rule. In other words, economic government means forcing the rest of the eurozone to adopt Germany's economic and social policies. (Since this is not going to happen, one wonders what the purpose  of this proposal might be. None of this would have prevented the crisis had this been in place ten years ago. None of this will get us out of the crisis. One still gets the impression that Berlin is pussyfooting on crisis resolution.)

"I will not allow the European Commission to be sidelined," Barroso told his aides afterwards.

"But obviously, I will collude with Merkel to sideline the European Parliament", he didn't even need to add.

_{It is rightly acknowledged that people of faith have no monopoly of virtue - Queen Elizabeth II}

In Europe, parties advocating deregulation and neoliberal economics have won the elections had since the crisis started, and the macroeconomic arrangements that sustain the internal trade imbalances within the Eurozone are not going to be reformed but strengthened.

Keynesianism is intellectually hard, as evidenced by the inability of many trained economists to get it - Paul Krugman

But I'd like to draw your attention to a proposal from Marco Annunziata, the chief European economist at UniCredit, the Italian bank.  He suggests that fiscal responsibility should be "hard-coded into each country's legislation in the form of automatic, binding and unchangeable rules".  He cites the example of Poland, whose constitution sets a ceiling for public debt of 60 per cent of gross domestic product.  He could also have mentioned Germany, which adopted a constitutional amendment last year that will restrict budget deficits to 0.35 per cent of GDP from 2016 onwards.

...

It is an intriguing proposal, not far removed from what is already under discussion in German policymaking circles.  I see one or two difficulties with it.  One, as Annunziata himself points out, is that a government nearing the end of its term in office may push up spending with the aim of winning an election and - if it loses - leaving the subsequent, constitutionally decreed belt-tightening to its successor.  This is a recipe for bitter political conflict.

My second reservation is that constitutions are not, in my view, an appropriate place for eternal rules about economic policy.  Constitutions lay down principles of government.  They establish whether a country is a monarchy or a republic, a presidential system or a parliamentary system or a mixture of the two.  They guarantee inalienable human rights.  But they should not set out detailed formulae for economic policy, because no one can possibly know what economic circumstances will arise in the years after the constitution was written.

FT.com: Berlin weaves a deficit hair-shirt for us all (Wolfgang Münchau, 21 June 2009)

A decision was taken recently in Berlin to introduce a balanced-budget law in the German constitution. It was a hugely important decision. It may not have received due attention outside Germany given the flood of other economic and financial news. From 2016, it will be illegal for the federal government to run a deficit of more than 0.35 per cent of gross domestic product. From 2020, the federal states will not be allowed to run any deficit at all. Unlike Europe's stability and growth pact, which was first circumvented, later softened and then ignored, this unilateral constitutional law will stick. I would expect that for the next 20 or 30 years, deficit reduction will be the first, second and third priority of German economic policy.

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I can foresee two outcomes. First, Germany might end up in a procyclical downward spiral of debt reduction and low growth. In that case, the constitutionally prescribed pursuit of a balanced budget would require ever greater budgetary cuts to compensate for a loss of tax revenues.

...

Either of those scenarios, even the positive one, is going to be hugely damaging to the eurozone. In the first case, the German economy would become a structural basket case, and would drag down the rest of Europe for a generation. In the second case, economic and political tensions inside the eurozone are going to become unbearable. Over the past 25 years, France has more or less followed Germany's lead at every turn, but I suspect this may be a turn too far. Deficit reduction has not been, nor will it be, a priority for Nicolas Sarkozy, the French president. On the contrary: he has listened to bad advice from French economists who told him that budget deficits are irrelevant, and that he should focus only on structural reforms. Budget deficits and debt levels matter in a monetary union. But a zero level of debt is neither necessary nor desirable.