The European Central Bank is firing its bazooka and lending massive amounts to European banks, which they can use to purchase Euro government debt that pay higher interest for some easy money. It’s a backdoor way of being the lender of last resort for sovereign debt, while bailing out the banksters.

If European banks need $154 billion in cash to meet new capital requirements and backstop losses on sovereign debt, and investors are unlikely to be a source for raising cash, then banks really have nowhere else to turn except their national governments. And that may get problematic in a hurry.

The 17 countries of the Eurozone formally backed a new deal for fiscal management, one designed to “save the euro” but which can only help if a host of other measures fall into place, including any plan to actually boost growth on the southern periphery.

Earlier in the week, I wrote about how David Cameron wanted to use his leverage as a non-Eurozone member of the EU to wring concessions as a condition of signing treaty changes. At the EU summit, he presented his aims: basically, softening a financial transaction tax that the other countries in Europe want, and other policies that protect British banks. Because you need all 27 members of the EU on board with the preferred fiscal policies that really only affect the 17 countries in the Eurozone, Cameron thought he had the power to hold out. So Cameron vetoed the revisions to the Treaty of Lisbon. And then the Eurozone leadership, essentially France and Germany, went around Britain and negotiated a bunch of Eurozone side deals.

Harold Meyerson confuses them today in an otherwise useful column on how democratic governments are being forced aside due to economic pressures.

The European Central Bank pulled out some of its arsenal today, lowering its benchmark lending rate to 1% and “relaxing” collateral standards for lending to banks. This action highlights the dichotomy between what measures elites will proffer to banks versus what they will give to the people of the affected countries on the European periphery, who had nothing to do with the lending decisions that caused the crisis, certainly not as much as the banks did.

Tim Geithner hopped a flight to Europe, hoping to ensure that the crisis in the Eurozone resolves itself without too much trouble for anyone – I mean, if you leave out the citizens of the affected countries, that is. You will find Geithner and other US officials holding the strings of many of the policies Germany and France have tried to impose on Europe.

France and Germany have reached agreement on a fiscal plan for Europe that has everything to do with veto power for the European Commission over sovereign budgets and very little to do with the long-term problem of smoothing growth over 17 different countries operating under one monetary union.

The powers controlling Italy, namely the EU, have decided that this time of imminent recession in Europe is a perfect backdrop to start paying down Italian debt, at odds with all economic theory. So the new government has ordered that retirement ages be raised and pension benefits cut to satisfy the austerians.

David Brooks wants to see the people of Spain, Portugal, Italy and elsewhere suffer, because their leaders were no more competent than the people at the ECB or the banks making loans in Germany, France and elsewhere. He thinks that they should endure long periods of high unemployment, see big cuts in the pensions for which they worked decades, and have education spending for their children reduced.