The leaders of eurozone countries are desperate to avert a full blown currency crisis, but they are divided by conflicting interests and fearful of workers fighting back.
"It was a stand-up argument. He was shouting and bawling," said one Brussels official. "It was Sarkozy on steroids," said a European diplomat. The European ruling class were in disarray as another, potentially even more damaging, episode of the world crisis unfolded in the eurozone.
In a confrontation between leaders of the eurozone's most powerful economies, Nicolas Sarkozy, the French president, threatened to abandon the euro and walk out of talks if Angela Merkel, the German chancellor, did not back plans for the €750 billion safety net for the single currency. Jean-Claude Trichet, president of the European Central Bank (ECB), pronounced that Europe's economy "is in the most difficult situation since the Second World War or perhaps even the First World War".
The Brussels summit of 16 leaders had been called on 14 May to rubber stamp the rescue package for the Greek economy. However, it was overtaken by events. The bailout of Greece in the previous week was not enough and financial markets had targeted Spain and Portugal. What began as a Greek emergency had developed into another full blown crisis - this time of the euro, which has plunged in value. Some commentators claim that it is on the verge of meltdown.
At the end of the week, in a huge U-turn, the ECB pumped money into the system by buying eurozone government bonds in the countries worst hit by the crisis over public finances and the massive financial package of €750 billion was agreed to support the euro. In the short term the ECB papered over the cracks and averted meltdown of the Greek, Spanish and Portuguese economies. But there are much more difficult longer-term decisions for the European ruling class. Despite the petulance and the table thumping, threats to pull out of the euro are unlikely to be carried through, although this scenario is not impossible. France could pull out of the euro, but not without bringing the whole European project crashing down.
Despite complaints about bailing out weaker capitalist states, the German economy is inextricably linked to the euro. José Manuel Barroso, president of the European Commission, argued that fully harmonised tax and spending policies were necessary, otherwise the euro had no future.
Around half the mortgages raised by Spanish construction companies to build flats on the Costas were funded by German banks. Much of the cash behind the property booms in Greece, Spain and Ireland came from Germany, and without these loans the property boom would not have happened. A meltdown across the eurozone would cause a banking crisis in Germany.
But this was not just an "inside job" for the leaders of the eurozone. According to one diplomat, Barack Obama was on the phone to Sarkozy and Merkel insisting that massive sums of money had to be mobilised to "impress the markets" and stop confidence bleeding away. Even the Chinese premier, Wen Jiabao, weighed in, warning that the debt crisis might spread globally if European leaders did not take action. An EU that returned to individual currencies and protectionist measures would exacerbate the recession and threaten the demand for US and Chinese goods.
Trichet said, "There is a need for a quantum leap in the governance of the euro area. There need to be major improvements to prevent bad behaviour." But the prescriptions of the ruling class go way beyond wrist slapping. What they are advocating is enormous and punitive cuts in public spending, reforming labour markets to increase insecurity and raise unemployment even higher, and more privatisation.
The pattern is the same throughout Europe - working class people are being asked to pay for the crisis. The general prescription is a freeze in public sector wages or pay cuts and an increase in pensionable age. Capital spending projects are cancelled and deferred indefinitely. The Spanish economy shrank by 3.9 percent last year. There is an average unemployment rate of 20 percent, for young people it is double this figure, and there are 1.3 million households in which not one person has a job. Now public sector wages are to be cut by an average of 5 percent.
The European bosses' association, BusinessEurope, has urged moves towards even more open markets and reduced barriers for labour and capital. They want to see the expansion of the single market in services, energy and the digital economy. This is less attractive to the ruling class in economies such as Germany and France who want to protect uncompetitive sections of their economies.
The lessons of the eurozone crisis are the lengths to which the European ruling classes will go to prop up the euro and the European project as a whole - it is central to global capitalism. However, there is disarray between the different countries as to who will pick up the bill. Germany unilaterally banned the trading of some types of financial assets and is urging more public sector cuts on weaker capitalist economies. Sarkozy wants more economic coordination to bring about this economic discipline.
The big fear of the European ruling classes is that working class people will not take the medicine of huge slashes in spending and pay cuts. They are petrified that the explosion of anger in Greece will be repeated across Europe.