Germany Conquers Great Britain Without Going to War

The lead article in today’s New York Times, “German Vision Prevails as European Leaders Agree on Fiscal Treaty,” describes a new agreement among European nations with far reaching consequences for the global community.

The pact involves central oversight of member governments with the ability of the European Court of Justice to strike down any law deemed to be fiscally imprudent. This represents a “federalist” type of integration, making the European Union more like the United States in the overarching power of a central government.

The big loser in the agreement was Great Britain, who had already opted out of the Euro, and opposed the current pact as well. While this may protect Great Britain’s financial sector, the protection is bound to be temporary as one country can’t compete against the resources of 17. Great Britain was the only country, either in the Euro zone or outside of it, to end up opposing the agreement.

This was largely the decision of the Conservative head of the British government, David Cameron, and he is bound to take heat for his obstreperousness and short-sighted decision. How Britain can remedy their policy in the future remains to be seen.

There is still the question of providing a financial backstop to prevent current defaults by Spain and Italy, but with the long-range outlook secured, this should fall into place as well.