I sympathise with the Germans. This is not because I agree with their prevailing view of how the crisis occurred or what to do about it. I sympathise because the German elite were the ones who understood what creating the euro implied. They realised that a currency union could not work without a political union. But the French elite wanted, instead, to end their humiliating dependence on the monetary policy set by Germany’s Bundesbank. Now, two decades later, Germany’s partners, including France, have learnt a painful lesson. Far from being liberated from German control, they are now far more firmly under it. In a big crisis, creditors rule.

Consider how much better off Europe would have been if the exchange rate mechanism had continued, instead, with wide bands. Interest rates in the crisis-hit countries would probably have been higher and asset price bubbles and current account deficits smaller. When the turnround in financial flows occurred, currency crises would indeed have erupted. The Greek drachma, the Irish punt, the Portuguese escudo, the Spanish peseta, the Italian lira and, maybe, the French franc would have devalued against the Deutschmark. Price levels of these countries would have shown a temporary jump. But the blame for any fallout would have fallen overwhelmingly at home. I feared that the euro would weaken the sense of mutual trust, in a crisis, not reinforce it. So it has proved already, even though the eurozone has barely started the adjustment.

Why, then, do creditors rule in a crisis? The answer is simple: they can borrow cheaply. As lenders have fled from weaker credits, the interest rate on German Bunds has fallen to 1.3 per cent, against 5.8 per cent in Italy and 6.2 per cent in Spain. With flat nominal gross domestic products, countries with high interest rates are at risk of falling into a debt trap. They need help in controlling their costs of borrowing that only creditors can supply. (See charts.)