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Friday, June 24, 2011

The verdict from Europe: what do they say about the euro?

With the eurozone staring into the abyss, let's have a look at what the papers and commentators across Europe are saying about the state and future prospects of the Single Currency.

We've tried to do as comprehensive a survey possible with the languages at our disposal in the office and it makes for pretty grim reading:

Let's start with Germany. FAZ columnist Philip Plickert challenges head on the common wisdom that Germany is "the main beneficiary" of the single currency. He notes,

"In the twelve years since the euro was introduced, Germany has had on average the lowest growth rate. It was with 1.2% significantly lower than the eurozone average of 1.5% or EU average of 1.7%."
A couple of days ago, Der Spiegel published its "Requiem for the euro" and warned,
"The euro is becoming an ever greater threat to Europe's common future. The currency union forges together economies that are simply incompatible. Politicians approve one bailout package after the other and, in doing so, have set down a dangerous path that could burden Europeans for generations to come and set the EU back by decades."
Moving to France, in yesterday's Le Figaro, a trio of French intellectuals argued,
"The time has come for European politicians to face reality: the euro is dying; it needs to be finished off quickly in order to save the Europeans. But it seems appropriate to do it all together in order to avoid a deadly ‘every man for himself’ scenario…For France, the benefits of [eurozone] exit will be immense."
You don't read this stuff in the French press every day.

From France to Belgium (the Flemish-speaking part). Last week, Ruben Mooijman, Chief Economics Editor of De Standaard, noted that, when the euro was created,
"Criticism could be heard mainly from the Anglo-Saxon world. It was pointed out that perhaps eurozone countries trade with each other a lot, but differ radically from each other economically. Unleashing a single monetary policy upon all these countries, with all their differences, was like playing with fire, according to those critics…The critics have been proven right."
He went on,
"Greece would have been better off without the euro, everybody agrees on that. And that the ECB with its interest rate policies is bouncing between the interests of Southern European countries which want to stimulate their growth and Northern European countries which want to stop inflation, is causing little doubt as well."
Moving to its Benelux neighbour the Netherlands, Marike Stellinga, Economics Editor of Dutch magazine Elsevier, urges Dutch Finance Minister Jan Kees de Jager to "stop with this puppet theatre" and argues,
"The EU pretends as if the Greeks will pay back their debt, as if banks didn't suffer losses on their loans to Greece. Now the EU will pretend as if the private sector is really going to contribute to saving Greece (...) The EU will continue to build up loans upon each other until all debt has been transferred from banks to governments."
In Austria's Die Presse, columnist Franz Schellhorn writes that EU leaders,
"prefer making Greece’s ride to hell as convenient as possible. It is almost as helpful as giving someone who is about to commit suicide a soft rope in order to make the experience more enjoyable."
Moving north, a leader in Finland's Iltalehti argues,
"The [Greek] crisis got on the wrong track already back in 2010. Greece’s immediate cash problems were taken care of, although the main problem was that the country would never be able to survive its debts, even if they would be halved by a debt restructuring."
In potential euro member Denmark (well, maybe not so much anymore), Politiken economic commentator Niels Lunde notes,
"Greece stands on the brink, the debt has exploded and is growing bigger every day, and it is now only a matter of time before the country must hoist the white flag and declare themselves a bankrupt state.There are only losers in the history of Greek tragedy, and there are indications that European taxpayers will be among the largest."
Now, let's have a look at what the press says in the eurozone's "periphery" (no offence). A leader in today's Irish Times argues,
"That a continent holds its breath for a vote in the parliament of a small peripheral country [yes, they're talking about Greece] says much about the precarious predicament in which the euro area finds itself…The EU is being shaken to its foundations by this crisis. What shape the euro zone’s economic, fiscal, financial and political structures will take in the future is unclear. One thing is certain though, they will either be very different or they will not exist."
In Spain, last week El País noted,
"As the endless crisis battering the EU gets deeper, the artificiality of the lost paradise of the ten years preceding the fiscal fire which is now spreading across the eurozone’s periphery, becomes more apparent. Greece is pushing Europe ever closer to its limits."
Italy’s main financial daily, Il Sole 24 Ore, proposes full steam ahead towards a fiscal union. LSE Economics Professor Francesco Caselli wrote last week:
“The lesson we’re asked to learn today is that it’s not possible to have a monetary union without unification (coordination, if the word ‘unification’ alarms you) of public finances. It’s not difficult to guess the lesson we’ll be proposed tomorrow: that it makes no sense to have an European Finance Minister without an European Prime Minister. And so on, relentlessly, towards full political unification.”
From the epicentre of the storm, Greece, a comment piece in yesterday's Ethnos argued that EU leaders must
“overcome national reservations and petty calculations [and start acting as the] responsible leaders of Europe, and not the leaders of Germany, France, or the Netherlands”.
Writing in Portuguese I Informação, a couple of days ago Economist Fernando Gonçalves noted,
"Analysts of all type of quality and character accuse the periphery countries of financial disasters, forgetting that maybe the principal problem of Europe is political…The political stubbornness and lack of minimum common objectives between Europeans, associated with a significant amount of excesses of all orders (including cloaked paternalism) have produced levels of insecurity that profoundly undermine confidence, which is essential for the recovery of the more fragile countries."


Nigel Carter said...

Has this crisis, so badly-handled, been deliberately cooked up to scare us, bully us, into accepting a degree of total financial control from the centre of an all-powerful EU which we would never have accepted otherwise? ...or are the EU leaders complete dunderheads who stumbled into a major crisis totally unawares? Ooops! Either way, the prospects are not pleasing! The best way to make a country behave responsibly is to make it responsible for its own floating currency which worked for thousands of years. Let them devalue and prosper. Why should they suffer just to serve the grandiose dreams of a new EU elite that wants to bestride the world as a major power? What hubris! nc24Jun11

Anonymous said...

Let Greece default now. The financial pain will be considerable for all, including the UK, but much worse if delayed following further useless bail-outs. Greece, Ireland, Portugal, Spain could adopt their original currency again and take essential action to recover their market competitiveness. Our government is useless; David Cameron is a liar, is deceitful and spineless. When EU pressures are applied he capitulates. Get rid of him and all his cabinet cronies. We want a leader with guts, a leader who stands up for queen and country, an honest leader who tells us how it is and takes effective action immediately. We have the talent and determination in Nigel Farage and Dan Hannan. Like-minded Eurosceptic realists in the three main parties must join up to wage the battle, a battle that will be difficult, tedious, costly, lengthy but will create the means to make the essential first step to freedom from the European Project. Repeal the 1972 European Communities Act, deprive the treacherous elite of their scandalous pensions, perks and allowances, redirect the daily £48 million paid to the EU for the “privilege” of membership and use it to properly equip our forces, our schools and the health service.

Oskari Juurikkala said...

Thanks for this great summary! We are living in interesting times.

Andrew Smith said...

It is great to read that the Chief Economics Editor of De Standaard recognises that [some of] the Anglo Saxons were right all along about the Euro. But here the Europhiles are still claiming there could conceivably be "the right conditions" for the UK to join as well.

We had as much from Blair last week.

It would be helpful if the Europhiles would engage their little grey cells and think about the issues rather than shutting them out of their minds. While I disagree with them, it is admirable to have an ideology and an objective, but when it was shown to be silly in theory and the experiment has proven it, we should expect them to change their minds.

A bit of contrition would be welcome.

BTW did any of the same people who used to idolise the USSR ever apologise they got that wrong too?