The talks are deadlocked, reflecting a deep rift between Euroland's two great powers. The French fear the EU's €440bn EFSF rescue fund will not be enough to shore up monetary union without mobilising the might of the European Central Bank as lender of last resort. It is a view shared by UBS, Citigroup, RBS and the US Treasury.It's hard to see any kind of concrete proposals being announced on Sunday, certainly not any that will get passed the 17 Eurozone national parliaments - it took nearly 3 months to get July's relatively proposals to get approved.
Paris has grave doubts about Mrs Merkel's demand for larger "haircuts" – perhaps 50pc – for Greek bondholders. Such a move risks triggering default, crystallising crippling losses for French banks and courting "Lehman-style" contagion.Mr Sarkozy's task is made harder by bail-out fatigue and mounting euroscepticism in the Bundestag.
Instead, it is likely that Sunday will follow a well trodden weary pattern, a big announcement that later doesn't hold up to scrutiny on the details. Yet in the law of diminishing returns, the time between an EU 'solution' to the Euro crisis and it being picked apart gets shorter and shorter. One wonders how long Sunday's proposals will fool the markets, not long I suspect; it could fall apart as soon as Monday morning.
Yet any failure to grapple with the crisis will have grave consequences, as Sarkozy himself acknowledges:
"If there isn't a solution by Sunday, everything is going to collapse,"It's quite possible, and with deep irony, that as Cameron and his merry band of Europlastics debate the finer points of repatriating powers back from Brussels on Monday, the whole damn thing is collapsing around their ears.