The mood in Downing Street is defiantly chirpy, or perhaps chirpily defiant. The Chancellor was given Mr Major's personal, cast-iron, '1,000 per cent' backing. In turn, he has privately ridiculed the idea that he is a Europhobic rebel leader-in-waiting. Mr Major, Douglas Hurd and Richard Ryder, the Chief Whip, have prepared a parliamentary showdown on Maastricht as soon as the Commons returns.
Refusing to let newspaper editorialists kill off Mr Lamont is mere prudence on Mr Major's part. Sacking the Chancellor in these frenzied circumstances would be a sign of weakness, not strength. The policy was a joint one and the mistakes were made jointly. If the small guy deserves to go, the tall, thin one does, too. So mere self-preservation dictates that Mr Lamont will get his chance to defend himself before the Conservative Party conference, and then under cross-examination by the Treasury select committee when the Commons returns.
In the longer term, Mr Major may yet decide that Mr Lamont will have to move. Getting the Government back on course will mean a reaffirmation of the Maastricht project and an eventual return to the exchange rate mechanism. The heavyweight, pro-Europeans in the Cabinet - Mr Hurd, Kenneth Clarke and Michael Heseltine - have been making this pretty clear. But it would be infinitely harder to accomplish those ends while the Chancellor is at daggers drawn with the Bundesbank and the German government.
Relations between Mr Lamont and Helmut Schlesinger, president of the Bundesbank, are not as bad as some of the more lurid accounts have suggested, though strictly formal at best. But he and the German Finance Minister, Theo Waigel, nurse a deep mutual suspicion. The German ambassador to London, Baron von Richthofen, has damaged his credibility inside Downing Street, the Treasury and the Foreign Office, perhaps irretrievably. One Whitehall source said, somewhat brutally, 'the guy might as well return to Germany tomorrow'.
Despite more widespread irritation with the Germans, when it comes to the most influential Bonn ministers, Mr Lamont is out on a bit of a limb. The time may come, and quite soon, when the Chancellor becomes a hindrance. If so, Mr Lamont would do the decent thing.
If, or when Mr Lamont does go, the Tory anti-Maastrichtians will try to turn him into a martyr (which he will find a new experience). Though the thought has not yet fully sunk in, they will say he has been dismissed by the Germans.
Think of what that will do to the party's blood pressure. Think of what Nicholas Ridley and Norman Tebbit could make of that. A Lamont resignation under these circumstances would be more significant for Britain's self-perception, and the Tory party's pride, than the resignation of Nigel Lawson. It would be a humiliating moment of truth.
But truth is the right word. Economic failure brings a political price. Between London and Bonn-Frankfurt there is not a relationship of equals. What the Treasury was doing from the time of Britain's entry into the ERM in October 1990 was to subordinate itself to the anti-inflationary credibility of the German bankers. As Mr Lamont himself said a year after entry: 'That is its real significance. Linking sterling to other currencies with a proven track record of low inflation (eg, Germany) will be an added discipline on monetary policy.'
In the world of the ERM, and certainly of monetary union, the Chancellor of the Exchequer in London is not a fellow of any great consequence. Some of Mr Lamont's irritation with the heavy-handed Bundesbank, and the Germans' disdain for Mr Lamont, must be attributed to this awkward, but obvious, fact.
Mr Major's ambition to rebuild his policy, and with it his reputation, is neither foolish nor doomed. The history of the franc's early years in the ERM, when there were repeated devaluations, is analagous to the position of the pound in the early Nineties. But 10 years ago there were no Gallic shrugs or dramatic walkouts. The Mitterrand government gritted its teeth and persevered, and Socialist France, unlike Tory Britain, kept inflation down after the mid-Eighties.
The prize to be won in political respect is a huge one. Think first of the embarrassingly gushy briefing that we heard in the early days of Mr Major's premiership about how much Helmut Kohl liked him - the famous photograph on the German Chancellor's desk, as if Mr Major were some blousy Bavarian mistress. The breathless enthusiasm of Number 10 demonstrated vividly that Britain was the junior petitioner.
Now, compare that with the serious mutuality of Mr Kohl and President Mitterrand as the world waits to see whether they will press ahead with private plans for a new currency, the so-called franken. Macro-economic determination buys political respect. The events of this week were not primarily about leaked documents and diplomatic bungling. They were about relative national power and the pain of coming to terms with life in the slow lane. And that was rather