She's certainly not taking the easy route, but it's the right route nonetheless.
It's all posturing. We will be back to this in 10 or 15 years regardless of any "rule" imposed now by Germany, unless we switch to superpower-mode and let the ECB play on the same level with the Yankees and the Chinese. The current agreement takes powers from individual banks but then it doesn't give them to a new subject; a huge macroeconomic power is kept hostage to the lie that the EU is not a unified body when, for all intents and purposes, it will have to be if it wants to survive.
Otherwise we might as well go back to our little villages and watch them being crushed one after the other. Merkel might keep enjoying her cows a couple of years more than the others, full of her righteous fiscal discipline, and eventually she'll be bought off by the Chinese like everyone else.
You seem to have a bone to pick with Germany and France (and I assume with all the original 6 EEC members) , but the fact of the matter is that they (some more than others coughItaly,Belgiumcough) at least managed to grow slow enough to make things not quite as unsustainable, unlike the more recent members who saw the advantages that the EEC member got out of the union but who weren't, let's be honest here, politically and economically mature enough to be in the same league as the others. It's not about 'oh but they did it as well!' - some could afford it, others couldn't, and shouldn't have. And it's their responsibility, and all this whining and blaming others now just shows their immaturity and unwillingness to take the sour with the sweet. (i.e., when my neighbor makes more money than I do and buys a BMW, and I buy one too and it's repo'd because I can't afford it, do I have a valid defense in saying 'oh but he bought one too?' Of course not).
(btw, I'm not sure how you can call 'fiscal discipline' 'righteous'. It gives off the impression that you have no rational understanding of the situation and just 'feel' that things should be in one way or another, completely disregarding objective reality.)
The biggest problem of Europe is probably that it's unfinished. Now, its institutions should be completed quickly to prevent further degradation of the situation on the markets (or, let's hope an improvement) but that's going to be very difficult.
I'm also concerned that, because of the current situation, the UK will never be willing stand at the core of Europe. And in my opinion, it's very much needed.
Thank you, but no thank you.
I don't like to say this, but the only logical solution is the one put forward (half-heartedly) by Sarkozy: let the ECB be the European FED, a proper central bank with full powers at European level, so that debt can be underwritten by Europe as a whole. The collective credibility of Europe as a huge market and productive force is unquestionable, so this would stop speculative moves and stabilize the system.
Unfortunately, Germany is currently led by a chancellor who thinks she's running a Bavarian village, and would rather try to save her cows into a "safe barn" than to stop the avalanche from getting into the valley in the first place. This makes it easy for US and UK media to fuel doubt in the Euro, indirectly boosting their own currencies and helping themselves to artificially-low borrowing rates.
And I say that as a UK citizen who will eventually benefit from this state of things (through increased public investment, or rather less ferocious cuts by the bunch of aristos currently running the show over here).