Another Perspective on the Euro

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2011 saw all attention focusing on when Greece would be forced out of the Euro and which other countries would follow. That may not now be the correct perspective on the eventual breakup of the Euro and the degree of panic that may surround it.

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It was perhaps natural that the world would look on in deep concern as the Euro crisis was allowed to spiral over a six year period. As Greece was admitted into the Euro Zone against all of the financial rules, that were supposed to protect the integrity of the Euro, the finance markets always viewed the country as the prime candidate to leave first. As the scale of the debt crises in Portugal, Ireland, Italy and Spain became obvious, the finance markets began to consider them likely leavers. That focus on the Southern countries of the Euro Zone diverted attention from Germany and France.

During 2011, a series of “last chance to save the Euro” summits were held. Each summit appeared to produce a plan of action, only for it to unravel in the days following. The end result is that the finance markets have lost patience with the political pigmies running the Euro Zone countries and no longer believe that any credible action plan will be produced. Many economists have pointed out that the single currency is only really a single currency if it accepts all government debt for the Euro Zone and that the collective assets of the Euro Zone country should be available to address debt crises. They go on to point out that, in theory, the Euro Zone is collectively able to pay its way by using the surpluses and savings that the stronger countries in the zone are believed to hold. They then observe that the IMF is only authorized to support sovereign currencies and that no money should be advanced to the Euro Zone until all resources within the Zone have been mobilized to ensure that there is no default. In theory, Greece, Ireland or any other Euro Zone member should not be able to default unless they first leave the Euro Zone. The creditors should be able to hold Germany and any other Euro Zone member jointly and severally liable for debt run up within the Euro Zone. If that is not possible, the Euro is not a single currency, but a token shared by the individual Zone members, where each national Euro should be free to float and devalue.

So far, the economists have all been working on the assumption that Germany and France so desperately want the Euro to survive for political reasons that it cannot fail. Many assume that France and Germany continue to share a common vision for a European Super State. The reality may be very different and if so would explain why the crisis struggles on and grows to an insoluble problem.

The popular view is that Europe has been moving towards total integration but that ignores the history and the current pressures within individual States.

France always wanted to lead Europe and Germany wanted a method of rehabilitation after the serious damage that Germans had inflicted in wars against France, Europe and humanity. That French desire to become ruler of Europe was why France used its veto to block Britain from joining the first stages of the process that led to the EC and then to the EU. President de Gaulle simply didn’t want the competition from a still strong Britain. When the Traitor Heath lied to the British people and accepted demeaning terms for Britain’s eventual membership of the EC, he established the road to a progressively weaker Britain as France pocketed the vast sums from the CAP into which Britain became a major contributor, the fish stocks in British waters were ruthlessly plundered and attempts were made to destroy the City of London as THE international financial trading center. Had British Prime Minister Cameron surrendered to Franco German demands before Christmas, Britain would have been turned into a slave state but become the largest net contributor to the EU with no say over how British wealth was plundered. Only French greed and determination to completely humble Britain saved the day and forced Cameron to use the British veto. What has emerged subsequently is the confirmation that France has now been forced out of its cherished role of leading the EU. Germany is now the senior partner. The German desire to keep hold of its own wealth while the Euro falls apart is clearly demonstrated. Kanzler Merkel is clearly prepared to see all the other Euro Zone countries, including France, fail to protect German interests. All of this at first glance seems to support the economist’s views that the Euro Zone leaders will continue to fiddle while the Euro burns and that Greece will be forced out first followed in ones and twos by the other members of the Zone in a disorderly domino of defaults.

When the French Government tried to engineer a lower credit rating for Britain, it was not just a crude attempt to divert attention from their own growing problems but was a sign of hysterior as the worst of all French fears seemed to be confirmed that Germany would throw off the partnership with France and seek partnership with Britain.

If disorderly defaults begin in 2012, the chaos would export problems around the world. An orderly series of defaults, leading to the eventual dissolution of the Euro would avoid much of that chaos and create huge opportunities for other countries and from former Euro members who would then be free to devalue and sort out their economies to support new growth.

There is now a very different possibility over the demise of the Euro.

The peoples of Germany and France both want to return to their own national currencies and both countries have presidential elections in 2012 which the current Presidents are expected to lose. The changes to the two governments are likely to see the voters having a much greater say in what happens and introduces the possibility that the first two countries to leave the Euro may be Germany and France.

At the same time Russia and the US could also see large political changes and the British Prime Minister is captive to a position that the British people want to hold and strengthen.

The great irony may be that Cameron is forced into a position where he becomes a hero in Britain and be elected for four or five further terms in office. In the long term that may not be in British interests politically, but then again he may fall in a palace revolution. To the British way of life it could be a salvation, a return to full democracy and a re-establishment of Britain as the premier trading nation, freed of the shackles of the Eurocrats, able once more to trade freely with the world. There are already the first signs of British trade outside the EU increasing strongly. That will created new jobs in Britain, start to restore confidence, see consumer spending increasing again and for sustained growth to be established once more after the disastrous period of the Blair Brown Regime when wealth and growth were squandered.

It is now possible that the last countries to leave the Euro will be Greece, Italy, Spain and Portugal. This could be good for everyone, or at least the less disastrous outcome. These countries would benefit greatly from a significantly devalued currency and they could bounce back out of recession faster than France and Germany to form a new power block.

2012 could be a very interesting year that ends up with some real winners. It may be a very difficult year with many new challenges, but the total doom promised by Euro Zone leaders if the world doesn’t pick up the Euro debts may be greatly over rated.

Editor

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