THE EU
The euro has now plunged to an 8 month low following not only the rejection of the proposed EU constitution, but also reports that senior German officials had discussed the possible collapse of the single currency.
The report of these discussions was contained in a report from the German magazine Stern, which also called for an admission that the German economy had been seriously harmed by the abolition of the Deutschmark and the adoption of a single currency. The article called ‘Der Euro macht uns Kaputt’ (the euro is destroying us) described monetary union ‘one of the worst economic blunders made by Germany since 1945'.
A poll also revealed that 56% of Germans wanted the return of the Deutschmark.
A leaked internal finance ministry document commented on the ‘brutal divergences’ in the eurozone and that while the southern countries such as Portugal, Spain, Italy and Greece had enjoyed a windfall of lower interest rates, inflation was now a problem. Meanwhile the German economy had suffered from higher interest rates in an ever deepening recession. The document said that: ‘It is not clear that these problems are going to fade away in the foreseeable future. On the contrary: the gap risks getting wider, increasing the danger of an adjustment crisis’.
This had led Hans Eichel, the finance minister, to call a secret meeting in Berlin last Thursday that was also attended by the head of the Bundesbank. Joachim Fels, Morgan Stanley’s eurozone economist, warned the meeting of a possible ‘meltdown’ and the risk that the eurozone could break up. He said that the high debt states were unlikely to leave the eurozone voluntarily. But that a small group led by Germany might benefit from breaking away.
Mr Fels said yesterday that the EU was now ‘on a slippery slope toward disintegration and instability. The risk of a euro wreckage has risen considerably’.
A spokesman from the German finance ministry admitted that the meeting had taken place, but stated that ‘Mr Eichel believes that monetary union is a success’.
Meanwhile Stern has advised its readers to examine euro notes to see which letter the serial number starts with. German ones start with the letter ‘X’ while Italian ones start with an ‘S’.
Those who can remember the debacle of the UK membership of the ERM, might recall the Tory government trying to blame the Germans for the fiasco of the UK’s exit, when the Germans were not willing to waste their own money trying to support sterling.
People might also remember that it was the reunification of Germany and the rate at which the East German currency was converted that destabilised the ERM.
When push comes to shove, the Germans have a track record of putting their own interests first.
Politicians refuse to accept that the best form of government is the sovereignty of the nation state, and not supranational bureaucracies. Despite what many like to say about the redundancy of the nation state, the 20th century saw the collapse of the European empires and the emergence of a whole host of nation states. More recently we have witnessed the collapse of the Soviet Union and the break up of Yugoslavia. Even Czechoslovakia amicably split into two.
The corporatists and socialists of the EU and the European ruling class have set their faces against reality. This is the age of the nation state.
A one size fits all currency is not working and a one size fits all constitution will not work either.
The report of these discussions was contained in a report from the German magazine Stern, which also called for an admission that the German economy had been seriously harmed by the abolition of the Deutschmark and the adoption of a single currency. The article called ‘Der Euro macht uns Kaputt’ (the euro is destroying us) described monetary union ‘one of the worst economic blunders made by Germany since 1945'.
A poll also revealed that 56% of Germans wanted the return of the Deutschmark.
A leaked internal finance ministry document commented on the ‘brutal divergences’ in the eurozone and that while the southern countries such as Portugal, Spain, Italy and Greece had enjoyed a windfall of lower interest rates, inflation was now a problem. Meanwhile the German economy had suffered from higher interest rates in an ever deepening recession. The document said that: ‘It is not clear that these problems are going to fade away in the foreseeable future. On the contrary: the gap risks getting wider, increasing the danger of an adjustment crisis’.
This had led Hans Eichel, the finance minister, to call a secret meeting in Berlin last Thursday that was also attended by the head of the Bundesbank. Joachim Fels, Morgan Stanley’s eurozone economist, warned the meeting of a possible ‘meltdown’ and the risk that the eurozone could break up. He said that the high debt states were unlikely to leave the eurozone voluntarily. But that a small group led by Germany might benefit from breaking away.
Mr Fels said yesterday that the EU was now ‘on a slippery slope toward disintegration and instability. The risk of a euro wreckage has risen considerably’.
A spokesman from the German finance ministry admitted that the meeting had taken place, but stated that ‘Mr Eichel believes that monetary union is a success’.
Meanwhile Stern has advised its readers to examine euro notes to see which letter the serial number starts with. German ones start with the letter ‘X’ while Italian ones start with an ‘S’.
Those who can remember the debacle of the UK membership of the ERM, might recall the Tory government trying to blame the Germans for the fiasco of the UK’s exit, when the Germans were not willing to waste their own money trying to support sterling.
People might also remember that it was the reunification of Germany and the rate at which the East German currency was converted that destabilised the ERM.
When push comes to shove, the Germans have a track record of putting their own interests first.
Politicians refuse to accept that the best form of government is the sovereignty of the nation state, and not supranational bureaucracies. Despite what many like to say about the redundancy of the nation state, the 20th century saw the collapse of the European empires and the emergence of a whole host of nation states. More recently we have witnessed the collapse of the Soviet Union and the break up of Yugoslavia. Even Czechoslovakia amicably split into two.
The corporatists and socialists of the EU and the European ruling class have set their faces against reality. This is the age of the nation state.
A one size fits all currency is not working and a one size fits all constitution will not work either.
posted by erc @ 9:41 pm
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