Anyone who has grown fond of the euro crisis has little to worry about: it’ll be around a while yet. Even thedecisions of the latest EU summitwon’t see it off. On one hand, those who blame the politicians for the crisis are right. On the other, they’re sparing themselves the insight that the politicians are grappling with a gigantic real-world contradiction, which springs out of the logic of the system itself and can’t be so easily shoved away.

The starting point is the finding that the eurozone states are carrying too much debt. This is the verdict passed down by the states’ creditors, the financial markets, in line with their unvarying criteria on investments: safety and return.

The states have borrowed too much, but you can flip that around and say that the financial markets have loaned out too much. This isn’t to fling the blame for the misery onto the investors, but just to point out the underlying problem: the debts of the states are the assets of banks, insurance companies and funds.

The financial wealth of the world consists in large part of government promises to pay, and it’s the validity of those promises that is now being questioned. What this actually means is that the financial markets have raked in way too much sovereign debt. In short, they have too much capital on their hands – far too much to still be able to turn it into spendable cash.

Nuclear option

Such situations are common in capitalism. Industry also regularly turns out goods it can’t sell. The solution to this problem remains the same: devaluation, which leads to goods and factories being sold off or destroyed.

In the current crisis, though, it’s precisely this devaluation that must be avoided, for a large-scale write-down of financial capital would – the fear is – tip states and banks into the abyss. "Contagion" is the name of the threat that will be hovering over us for as long as the financial markets fear it.

To calm the markets, the politicians are moving on in quickstep to another solution. On the one hand, they’re pushing radical austerity programs onto countries to bring them back to health as viable investment spheres and to make the accumulated national debt mountain solid again.

They’re doing this to assure doubtful lenders that their investments are guaranteed – yet the guarantors are precisely those whose creditworthiness is being doubted. And so with money that they don’t have, governments are supposed to rescue states, prop up the banks and buy back the lost confidence in their financial clout.

This contradiction has been playing out for months now. The crisis of confidence is turning into a never-ending cycle that could probably only be broken in the short term if the European Central Bank were to step up as guarantor. For only the ECB can, in theory, hand out unlimited sums. The refusal of Germany in particular to let the ECB take on this role comes from the hope that the crisis can be tamed without this “nuclear option”.

Eurozone is not out of danger

And so tougher cuts, debt forgiveness for Greece, boosted capital reserves for banks and a bigger EFSF are supposed to take on the task of bringing back confidence in the creditworthiness of Europe. Whether it works out quite like that is iffy. Each of these steps is likely to stoke the mistrust even more.

Because with the slashing of the debt, politicians are revising their former position that the radical austerity programmes were actually working. The recapitalisation of the banks contradicts their former assurance that the banking system was robust enough.

By authorising the EFSF to support the banks, they’re giving up their claim that this recapitalisation was enough to ringfence the banks against the crisis. By making the EFSF bigger, they’re scrapping their verdict that the crisis was merely a problem of a few small states that didn’t know how to keep their books in order.

By leveraging the EFSF to ever higher sums in the billions, they’re disproving their claim that the eurozone is finally out of danger. And with the ongoing fight over the cost of the euro rescue, with worries about euro-bonds and any stronger involvement by the ECB, with the tight restrictions on relief measures – in short, with the constantly stressed conditions they’re slapping on the bailout, they’re contradicting their own claim to do everything possible, and with no strings attached, to save the euro.

Translated from the German by Anton Baer