It's wild that in 2027 -- seven years after the pandemic emergency -- governments will still be breaking eurozone deficit rules. This obviously doesn't end well.

In the long analysis, I think it will show that the optimum path for politicians trying to win the next election is to spend more, in part because the stability of the euro delays the consequences. But at some point this becomes a collective action problem as no one wants to enforce the 3% deficit rule.

Moreover, it all falls apart when the eurozone 'consensus' in the Merkel/Sarkozy mould is challenged by a populist wave. They see this as existential and allow the standards on deficits to slip even further in order to protect the status quo.

Eventually, the market does what it always does to European countries that spend too much and the currency is wrecked.

Anyway, more from Villeroy:

That last number is a real kicker and it puzzles me why the ECB isn't signalling quicker rate cuts.