EUROPE will not be saved in Brussels on Friday. At best, it will live to face another trauma. After these ‘10 days to save the euro’ there will be 10 weeks, 10 months, 10 years. What one Brussels observer describes as Europe’s “terrifying and boring” crisis will run and run. Angela Merkel compares saving the eurozone to a marathon; actually it’s more like a cross-country obstacle race, with a large new water-jump over every false horizon.

First, there is the immediate question of whether eurozone governments can win back the confidence of the markets. How difficult that will be is shown by the fact that, on the very day Merkel and Nicolas Sarkozy announced how they were (once again) definitively going to save the eurozone, Standard & Poor’s put even Germany’s AAA credit rating on a negative watch.

A bond market analyst explains to me how, once the fundamental confidence of investors is undermined, the whole calculus is changed. Then it is no longer about price. Company X or country Y can offer yields of five per cent, six per cent, seven per cent, eight per cent — the investors just don’t want to be there. Eurozone countries such as Italy need to borrow large sums early next year and the markets — those aggregators of individual greed and panic — may again say ‘no’. Then we’ll have another ‘10 days to save the euro’.

Next, there’s the question of what mix of fiscal union, greater European Central Bank (ECB) intervention and German guarantees for at least some of other eurozone countries’ debt (eurobonds, stability bonds, debt mutualisation, choose your own term) will calm the markets for a longer period — and whether the slow-grinding wheels of EU politics can get there fastenough.

The bond markets are like crocodiles; it takes elephants to drive them back into their river. The elephant in this case is a powerful, determined sovereign. It can do the one thing that financial markets cannot do but dream of at night: print money.Of course this has to be money that others will still accept as a strong currency — not threatening the “price stability” which is the Nibelung ring of contemporary Germany. Today’s ring is guarded by two Wagnerian giants, the Bundesbank and the German constitutional court, both singled out for special praise by Merkel in her address to the Bundestag last week.

But the truth is that in current economic circumstances the ECB could purchase more government bonds than it is buying at the moment, print more money, and still not bring inflationary excess. As the Economist points out, price stability must also mean preventing prices going down. What is going to have people pushing their euro notes around in wheelbarrows, as they famously did their Mark notes in Weimar Germany’s hyperinflation, is not, at the moment, inflation — it is a collapse of the eurozone.

James Carville, the pitbull-headed adviser to president Bill Clinton, famously quipped that if he came back to earth a second time, he would like to come back as the bond markets.

The bond markets, however, dream of coming back as James Carville. They would like nothing more than to be a key adviser to the president of an absolutely secure, elephant-like sovereign, such as the United States was until recently believed to be.

For only such a sovereign will guarantee — absolutely guarantee, in the bondholder’s dream — a risk-free return. The eurozone does not have anything like such a sovereign. To create it is a political challenge, not just an economic one.

The next water-jump in the obstacle race, which follows close on the last, is therefore the question of which eurozone states are prepared to agree to what political steps to oversee the fiscal union. If strict budget discipline is to be imposed oneurozone member states like Italy or Spain, what institutions will supervise and legitimate this intrusion into the core competences of a nation state and the lives of its citizens? Should it be existing central institutions of the EU, such as theEuropean Commission, perhaps given more legitimacy by direct elections? Should it be representatives of national parliaments, in a kind of senate?

France and Germany started with sharply contrasting views on this question. They split the difference this week, but will the resulting fudge be enough to satisfy even their own restless peoples and politics? (France has its presidential election nextyear, Germany’s general election comes in 2013.) And what about the Irish, Italians, Spaniards and Greeks?

Behind the dry language of ‘treaty change’, whether by all 27 member states of the EU or just the 17 current members of theeurozone, there lurk such political fundamentals as ‘no taxation without representation’. — The Guardian, London