unkleGsif.........you have a point....were all sugar loaded, fat arse, x factor robots now.
..why is the euro a curse ?
European leaders were driven by three motives when they embarked upon that ill-fated monetary experiment, the euro. The first was financial: they were set upon the creation of a global currency that was capable of competing on the world stage with the dollar. The second motive was economic. By eliminating exchange risks, they believed they would promote trade and deepen the single market.
But the over-riding purpose was, beyond question, political. The founding fathers of the eurozone were determined to use the single currency to promote political union. By doing this, they hoped to domesticate Germany, which had caused such chaos and devastation across the continent during the first half of the 20th century.
Noble though this project was, it is now possible to judge that it has failed on all counts. The euro has not mounted a serious challenge to the dollar, and it is no longer able to do so. Indeed, Europe is beginning to be held in contempt by the emergent powers of the Far East: hence the recent decision by China to hold off from purchasing any more euro-denominated debt, an overlooked reason why Italian and Spanish bond yields have soared in recent weeks.
Meanwhile, trade falters. The benefits of a single exchange rate were real enough. But they have been eclipsed by a problem which the founders failed to foresee. The ongoing economic calamity means that counter-parties are no longer prepared to do any business at all with the weaker eurozone countries.
Starved of investment, large sections of the Greek and (increasingly) Spanish economies are now opting out of the financial system altogether, and reverting to ancient forms of barter and self-sufficiency. The disappearance of conventionally recognised economic activity is being accompanied by a reversion to pre-modern methods of social control exercised by militias, which gain their legitimacy from a common ethnic identity and distrust of outsiders. These local organisations, which in some cases are starting to find powerful allies at a national level, explicitly reject the tolerance and plurality that formed the ideals that inspired the European Union in the first place.
Finally, the political mission of the eurozone is also faltering. Far from holding back Germany, the single currency has empowered the country’s industrial base in a way that was never expected. Peripheral eurozone countries such as Greece and Ireland have been reduced to a source of cheap labour and agricultural goods. With their own industries wiped out by an uncompetitive exchange rate, they can perform a residual function as a market for German industrial goods. Unable to trade with Germany as equals, they have been reduced to colonies.
Hence this week’s trouble in Greece. The frustration is that the solution could not be more simple. Were Greece to exit the single currency, it would start to recover within months, as history proves. The same applies to Portugal and Spain. Since the end of the Second World War, scores of countries have quit fixed currency systems, and in almost every case that has been the moment when growth has been restored.
Such a thought has been intolerable for European leaders, for whom the single currency has a messianic significance. As Angela Merkel told the Bundestag in May 2010, “the euro is much more than a currency. The currency union is a community of fate. This is our historic task. If the euro fails, then Europe will fail.”
The German chancellor was articulating the sentiments of almost the entire European political class, which is committed to the project. This view goes a long way to explaining the incompetence – and ugly inhumanity – with which the crisis has been handled so far. However, the reluctance of Mrs Merkel to abandon the European dream is at least understandable.
David Cameron and George Osborne have no such excuse. And yet over the past few months the British Government has emerged as one of the most eloquent backers of the European project. Repeatedly, the Prime Minister has warned that it would be bad for Britain if the single currency fractured. He and the Chancellor have thrown their weight behind ever more expensive bail-out schemes. They have even encouraged the conversion of the European Central Bank from its early function as a guardian of financial stability to its new role as an activist participant in European bond markets. Mr Osborne has put our money where his mouth is, unnecessarily committing tens of billions of pounds of British taxpayers’ cash to the euro bail-out funds.
Earlier this week, the Chancellor took this approach to a new extreme. When even Mrs Merkel started to express her nervousness about saving Greece as its domestic politics descended into chaos, Mr Osborne grandly rebuked her, declaring: “It’s the open speculation from some members of the eurozone about the future of some countries in the eurozone which I think is doing real damage across the whole European economy.” As an extra gesture of support, he allows Santander, a Spanish bank, to run the accounting system for HM Revenue and Customs.
Of course, Mr Osborne is right to think it would be wrong for a British chancellor to go out and undermine the economic strategy of our continental neighbours. But everyone would understand if he and Mr Cameron bit their lips and explained that we did not want to comment on private grief. Such an approach would be both diplomatic and statesmanlike.
Instead, something strange has happened. Mr Cameron and Mr Osborne appear to have swallowed the official European line that unthinkable disaster will ensue when the euro collapses. And, of course, it will be messy when Greece exits the euro. But the truth is that the single currency has been calamitous for the peripheral countries of Europe, and will get more calamitous the longer they stay in. Now is the time for them to walk away. And here Britain’s traditional role should be to provide help and support – for instance, by offering some of the most brilliant City minds to help the Greeks negotiate an elegant exit and plot a solvent future. Instead, the Chancellor is siding with Greece’s tormentors.
Just over 10 years ago, Wim Duisenberg, the first president of the European Central Bank, observed that historically the rearrangement of currencies only came about as a result of the destruction of national boundaries. The euro, he noted, “is the first currency that has not only severed its links to gold, but also its link to the nation”.
This audacious experiment has turned out to be a disaster. The size of the various bail-out funds so far mobilised to rescue the eurozone countries (as the writer David Marsh, whose recent book The Euro: the politics of the new global currency is by far the best guide to the whole sorry affair, has noted) is far larger in real terms than the reparation payments and reconstruction plans of the First and Second World Wars combined.
Above all, the British Government needs to do its duty by the people of Europe. It is not Mr Cameron and Mr Osborne’s job to encourage the European political class further along the road with their demented project. It is gently to help find a way out of this monumental, self-created human tragedy.
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