The root of the problem is simple: economic activity, culture and, of course, language varies considerably across Europe. This alone makes the realities of a single currency complicated and prone to disaster. But, before we get into the debts, let’s begin by taking a light-hearted look at some of the ‘slaves’ (and indeed the ‘masters’), and have a quick recap of the optimistic birth of the Euro …
A brief tongue-in-cheek summary of the European scene:
Germany – An 80% owner managed engineering based economy with a very strong work ethic and little sense of national identity. German engineering is not designed to go wrong and there is no ‘plan B’.
France – Has 60% nationalised industries; a strong engineering, mathematical and philosophical culture; and a strong sense of national identity and national pride. A beautiful country, with wonderful people who have made rudeness into an art form.
Italy – A black economy which is doing much better than the published figures suggest, but it cannot and will not pay its debts; even the beggars wear Prada. A country where ‘robber barons’ are loved.
Spain and Portugal – Essentially third world economic infrastructures involving plenty of sleep – apart from the property boom and bust, which has wrecked even what little they had. They like to think that they are different from each other but they are not.
Poland – A country of inventive survivors with a history of oppression; they will do well. They are progressively adopting the German model. They have a strong mathematical heritage and are artistically ‘gritty’ (Kieslowski’s Dekalog).
Greece – A poor country that has been corrupted by a ‘something for nothing’ cultural shift; tragedy is part of their culture / history and it seems history is repeating itself. They are one of the most looked-up to early civilisations…’like those who dine well off the plainest dishes, he made use of humble incidents to teach great truths’… (Philostratus, on Aesops fables).
Great Britain – A nation of eccentric, creative and resourceful people but with inflated patriotism. Not very organised, they let other people profit from their ideas. They start with ‘plan B’, quickly move on to ‘plan C’ and always end up with string and Sellotape holding everything together. But it does hold together.
The Euro: the myth and the reality
A single currency creates tensions which cannot find a natural relief through exchange rate fluctuations. There was a presumption (the ‘original myth’) when the Euro was launched that the diverse European economies would ‘converge’ over time and that the Euro would make international business easier to transact. In fact it has had the opposite effect with the weaker economies finding it more difficult to export because their cost base is too high and all they can do is keep cutting wages to remain competitive, eventually turning their workers into ‘slaves’.
The alternatives are potentially:
Workers migrate to areas where there is greater economic activity, but there are cultural and language difficulties which mean this is not practical on a scale that would make any real difference; or
The weaker economies revert to internal activities and tourism, but this is regressive and impractical in a world where economies have become structurally reliant on international trade and, perhaps more importantly, there is also the ‘debt problem’ – see below.
In the US, what happened when sectors of the economy and geographic areas experienced economic downturn was the first option above. For example, when the motor industry in Detroit ‘went bust’, people abandoned their houses and moved West. Of course it’s much easier for them to this than for the Greeks to ship wholesale to Germany. However, during the ‘Great Depression’, interestingly, the US Dollar fell out of use and many local currencies sprang up for a time. This approach mirrors what may well become part of the structural permanent solution to the Euro – people taking matters into their own hands and creating practical alternatives to what is being forced on them from ‘above’ and voting with their feet to make the dreadful Euro project irrelevant.
The Debt Problem
The debt problem arose because, with the launch of the Euro, (under the premise of the ‘original myth’) weaker economies borrowed heavily and banks / stronger economies’ were stupid enough to lend – on a grand scale. Because the original myth was just that, a myth, this has placed the weaker economies in a bad place with untenable levels of debt. It has been said that Greece was given the German credit card and quickly maxed it out on grand projects such as the Olympics, personal spending and non-viable business ventures. They are now trapped just like someone taking out ‘payday’ loans. They are creeping powerlessly and relentlessly in the direction of deeper and deeper slavery.
Why is the Euro still around?
The only reason that the Euro has not already been disbanded is due to ‘political pride’ and sustained belief in the original myth – the politicians and bankers simply don’t have the ‘balls’ to face realities and are behaving with Basil Fawlty-esque denial. They continue to come up with new plans for re-scheduled lending and austerity which they con themselves and the ‘markets’ into believing will ‘work’ and that there is a pot of gold at the end of the rainbow. Everybody ‘wants’ to believe the lies rather than face the inconvenient truths. They also ‘scare-monger’ about what would happen if the Euro was disbanded, which has the effect of suppressing the discontent. But everything is inexorably moving towards the end game – the point at which patience runs out and the populace will not stand for the lies and slavery any longer.
What does the future have in store for this ill-fated project?
Unless structures are put in place before the end game is reached to make the bankers and politicians irrelevant, there will be a disastrous collapse which will take a generation to recover from. The bankers and politicians could simply dismantle the Euro as easily as it was set up in the first place. But that would require guts. And that’s the one that thing they do not have much of – except when it comes to expense claims, bribes, bonuses and criminal activity! No, they will persist with their ‘head in the sand’ approach until either we have a replacement system to render them irrelevant or the system falls off the cliff. Hope it’s the former – it’s our job to make sure it is!