The 19th century yielded a rich harvest of German patriotic songs about the River Rhine and the need to hold it sacred as Germany’s frontier against the ambitions of France.

In the World War II movie Casablanca, a spirited rendition of the Wacht am Rhein (the Guard on the Rhine) by the German garrison is drowned out, on a nod from Humphrey Bogart, by the café orchestra belting out La Marseillaise with patriotic fervour. This classic Hollywood scene has been playing out in reverse over the last couple of weeks. The French government announced its plan to breach EU budget ceilings and called for aggressive monetary easing by the European Central Bank. These sentiments constitute a kind of French anthem for the times.

German finance minister Wolfgang Schauble and the Bundesbank choir responded with a high-decibel reprise on the virtues of balanced budgets and structural reform. Somebody should match these modern German lyrics to the tune of the Wacht am Rhein.

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France and Germany, the instigators of the European common currency area, have been at loggerheads for several years now about the continuing recession in the eurozone and how it should be managed. There will be no coherent policy response until they agree.

It is six years since the collapse of the Wall Street bank Lehman Brothers, which signalled the acute phase of the world financial crisis and brought to a head the Irish banking collapse. For most eurozone members, they have been six miserable years. Output remains below the pre-crisis level in many members, including Ireland, unemployment has doubled, while public debt is at unprecedented and possibly unsustainable levels in the periphery. The price level has actually been falling in several countries, including France and Italy, over the last several months.

With economic growth and inflation at zero, the textbook response would be to loosen both monetary and budgetary policy. Official interest rates are already infinitesimal and cannot be reduced further.

The next move in monetary policy has to be something called quantitative easing, or QE, where the central bank purchases financial assets directly from the markets, expanding money supply in the process. The USA, UK and Japan have already undertaken QE with reasonably positive results.

Tentative plans to move in the same direction from ECB president Mario Draghi have provoked squeals of protest from Germany, which is also resisting pressure to ease up on budgetary policy.

Germany is one of the few eurozone countries in a position to run expansionary budgets, but instead plans to target budget surpluses over the next few years. Countries like Ireland have such large debts that it would be imprudent to ease up on budgetary correction, so German reluctance effectively means that there can be no proper counter-cyclical policy in the eurozone.

The German diagnosis and recommended cure has been unwavering ever since the crisis broke. The downturn has been caused by a lack of budgetary discipline. The cure is the restoration of budget balance and reliance on structural reform. With the sole exception of Greece, the German diagnosis is plain wrong.

The crash has been caused by a banking and credit bubble, most severe in Ireland and Spain, but also affecting most eurozone countries and many outside the common currency area. Budget deficits in Ireland and Spain were non-existent before 2008.

The recommended cure does not stack up either. With activity contracting and prices actually falling, there is a real danger of a triple-dip to the European downturn. It has already been the deepest and longest since the end of World War II.

Any governments in a position to do so should be expanding aggregate demand and the central bank should be exploring every available instrument of monetary policy with a view to supporting the demand recovery.

Repeated German emphasis on structural reform, by which they mean measures to control business costs and improve efficiencies, are perfectly fine but will do nothing to halt the slowdown in the short term.

The best that the smaller eurozone countries can do is to support Draghi’s efforts to persuade Germany’s leaders of the merits of a more expansionary policy stance. It is simply not possible to run a common currency area without some overall macroeconomic strategy. The eurozone was designed without such a policy architecture – a tragedy for the millions of unemployed. German policymakers have admitted this weakness, but must also take the necessary remedial actions.