The Book of Ecclesiastes teaches that there is a time and a season for everything. The time for Peter Mandelson's admirable call for Europe to come together towards greater political and fiscal union was before the euro's January 1999 launch. For at that time the political spirit for greater European integration ran high and the extraordinarily large economic imbalances that presently characterise the European periphery were yet to manifest themselves.

Making the same proposal for greater political and fiscal union today in the midst of a major sovereign debt crisis seems distinctly odd. Europe's political elite is experiencing the greatest of difficulties in carrying its electorate along in stitching together yet another bail-out package for Greece. Yet Lord Mandelson seems to think that these electorates can be convinced that it is in their own interest to sign on to a fiscal union that will involve permanent transfers of taxpayers' money to the periphery.

One has to admire Lord Mandelson's unbridled optimism in the face of mounting evidence to the contrary that politics has a way of conforming to political necessity and that the basic logic and belief in European union will prevail. However, one has to wonder whether this view does not overlook the major public finance and external imbalances in the periphery that are now tearing the eurozone asunder. It is difficult to see how political wishful thinking will redress these imbalances while keeping the peripheral countries within the euro.

Rather than engaging in wishful thinking about the relative merits of greater fiscal and political union, Europe's leaders should now be seriously thinking about plan B. How is an orderly debt restructuring and exit from the euro to be arranged for Greece, Portugal and Ireland? How are Spain and Italy to be ringfenced? How is a major European banking crisis to be avoided when countries in the periphery exit the euro?

Desmond Lachman is a resident fellow at AEI.