That’s how Stephanie Flanders describes the €750bn bailout for Greece and the other troubled economies of Club Med: it looks impressive, and it buys the Europeans some crucial time. But they may not like where the ball eventually ends up.

Europe’s leaders have wedged their heads firmly in the sand.

I think that’s wrong – I think that Europe has a very good idea of where this is going, but is trying to pretend that it doesn’t, so when it happens they can look as surprised as the rest of us.

Is the bailout itself good news? Undoubtedly. The shock-and-awe action, forcefully advocated against a resistant Europe by government economists from America, Japan and the UK, probably saved the Euro and prevented the trashing of the continental economy, as well as ensuring the domestic stability of Portugal, Ireland, Spain and Italy. There’s pretty much no question that strong action was required to prevent a global fiscal collapse, of the kind that would erase the precarious recovery that the world economy has enjoyed over the last six months.

The intent is not in question, then. But the manner is somewhat more dubious. The Freethinking Economist does a better job of explaining the perverse incentives that the bailout has created than I could – politics is my writ, economics is really just a hobby – but political questions about the process that underlies the action remain. To whit: why would the EU have pursued such a knuckleheaded approach when a better, simpler alternative was on the table?

Sadly, it seems to be a result of weak government, both of individual member states and of the EU apparatus of agreement by consensus. As Simon Johnson and Peter Boone give us a flavour of the problems that afflict the governance of the Euro in today’s FT:

Given the incentive problems in the eurozone, it is no wonder more nations want to join – the requirement is just to appear prudent for a few years. No wonder also that it blew up. Nations with profligate governments or weak financial systems have a bonanza; overall, this system encourages a “race to the bottom” – led by governments in smaller countries, which relax fiscal and credit standards to win re-election (or just to enjoy a boom). They borrowed funds from the (unnaturally) less profligate in the eurozone. The Germans were austere; the periphery enjoyed the boom.

The Germans were the only parties to the carve-up who had an interest in arguing for more a sensibly constructed bailout, but – not to put too fine a point on it – Angela Merkel botched it. She failed to prepare Germany for the necessity of a bailout, spinning from cool, popular disdain to agreement in a manner that bewildered and alienated her government and her country. She failed to articulate why the bailout was necessary for Germany and the Eurozone to support the Mediterranean’s failing economies. Many of Germany’s voters believed, and still believe, that clause 125 of the Lisbon Treaty – the one which mandates that there will be no bailouts for members who pursue reckless fiscal policy – was binding and should have been adhered to.

So Ms. Merkel has done the only politically expedient thing: joined the rest of her European collegues in pretending that the package’s obvious failings aren’t there. Germany has become a truly European state. Few are fooled; as Sunday’s result in North-Rhine Westphalia shows, Germany’s voters are inclined to punish their government for its prevarication, lack of leadership and deceit.

This bailout may have stopped the immediate contagion from spreading beyond Greece. But it has driven the longer-term rot deeper into the heart of the single currency, by reinforcing the system of perverse incentives and by undermining the will of Germany, the currency’s salward defender and balwark, to resist the excesses of its neighbours. More worrying is that Germany’s governing CDU is only one year into its term, and will likely not be replaced until 2013.

A bit of good news though: apparently UK manufacturing a booming, albeit from a low base. So that’s nice.

Finally, for those in the UK expecting a government to emerge soon, the chart below may prove instructive. Click for bigger.