Stephen King, in today's FT, adroitly points out the problem of the German trade surplus.
"The eurozone deal will fail because it offers no explanation of how, precisely, the German current account surplus will be recycled if the southern European nations head down the path of fiscal righteousness."
The new EU treaty simply overlooks the mechanics of rebalancing the trade accounts between Eurozone countries. One cannot have the deficit countries become suplrus countries without Germany reversing course and shrinking their own current account surplus. It's worth remembering that in a closed economy, each surplus necessitates a deficit somewhere else. Thus, there are only two options for rebalancing: either German exports must fall or German imports must rise. Luckily, an EU recession will probably mean lower exports as EU GDP, particularly in the South, contracts. As for getting the Germans to import more, that's more of a challenge. It will unequivocally require more structural changes. And since EU countries cannot simply devalue via the exchange rate, such changes will have to occur in labor markets. Reported cases where similar jobs in Germany paying 55,000 euros, pay 70,000 in Greece cannot persist if the South aims to build more competitive economies.