Alas, going through the merits of this Agreement is akin to discussing a decent plan for extending the Maginot line through Belgium after Hitler had taken Paris. In short, the horses have bolted and we are debating the merits of the new barn gates. Am I exaggerating? Read Article 7 of the agreement to see that I am not. After Article 6 states that the haircut concerns Greece and Greece alone ("we would like to make it clear that Greece requires an exceptional and unique solution"), Article 7 adds: "All other euro countries solemnly reaffirm their inflexible determination to honour fully their own individual sovereign signature and all their commitments to sustainable fiscal conditions and structural reforms." In other words, the pledges that Greece was making till now, the rest (e.g. Ireland) will continue to make independently of their capacity to meet them. This is priceless gift to speculators who love nothing more than testing such unsustainable `solemn' and `inflexible' commitments on behalf of governments and EU bodies with a long history of such declarations that are confirmed more in the breach than in the observance.

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Now, if these three steps were enough to ringfence Greece, their implementation cost would be manageable and their outcome desirable. Unfortunately, this type of ringfencing is at least a year too late. Back then, prior to May 2010, the cost of these measures would have fallen below the EFSF's €450 billion funding base. Today, the cost has skyrocketed to around €2 trillion. For it is impossible to imagine that Greece will be borrowing at 3,5% while Spain is struggling to roll over its huge debts in the money markets at more than 6%. And it is preposterous to imagine that any sensible person will be convinced by our leaders' oath that the Irish debt will not be restructured when the Greek debt is subjected to a menu of alternative haircuts. Additionally, it is mindnumbingly perverse to think that sluggish Italy can be left to the appetite of the credit rating agencies and at the mercy of the wolves of the money markets who have already scented blood coming from Rome, Madrid even Brussels itself.

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My alternative interpretation is that Mrs Merkel has gone too far down the road of the fiscal transfers that she, supposedly, admonishes. As I argued above, this new package for Greece is hugely expensive on the German taxpayer and, worse still, it creates a fresh chain reaction (in the realm of speculation) that can only inflate that cost exponentially in the coming months. Rather than bringing about greater political union, and a new resolve to homogenise debt and investment, the escalating cost to the German taxpayer will undermine Berlin's political resolve to stick to the euro.