JakeS:

Simply pay out a percentage of EU nominal GDP per capita equal to the higher of the EU overall unemployment rate or the simple, unweighted average of the national unemployment rates.

Since the unemployment rate is eminently manipulable, use the employment rate to inversely determine the percentage.

When it comes to measuring output gaps, that is as you say, quite easy to manipulate, and some kind of simplified solution might be a good idea. It's better with too much fiscal support from the EFM than too little, as the ECB can far more easily adjust its monetary policy to deal with overheating than recession, due to the existence of the zero lower bound.

I think linking the funding of the EFM to the EU budget in some indirect way would help get it populist/eurosceptic support, which is sorely needed. You could avoid partisan problems by just saying that the EFM has the right to take XX% of the EU budget every year if it feels like. Obviously the EFM needs to be independent like the ECB, except staffed by non-crazy people. Ideally, people should think of it as an equal to the ECB.

And yes, it sure is a Rube Goldberg-device, but we can't let the perfect become the enemy of the good. Remember, every day with 25% unemployment in Spain is a total disaster. Every single day.

Peak oil is not an energy crisis. It is a liquid fuel crisis.