Skip to comments.Operation Self-Deceit: New Documents Shine Light on Euro Birth Defects
Posted on 05/15/2012 10:19:14 PM PDT by Olog-hai
Documents from the Kohl administration, kept confidential until now, indicate that the euro's founding fathers were well aware of its deficits. And that they pushed ahead with the project regardless.
In response to a request by Spiegel, the German government has, for the first time, released hundreds of pages of documents from 1994 to 1998 on the introduction of the euro and the inclusion of Italy in the eurozone. They include reports from the German embassy in Rome, internal government memos and letters, and hand-written minutes of the chancellor's meetings.
The documents prove what was only assumed until now: Italy should never have been accepted into the common currency zone. The decision to invite Rome to join was based almost exclusively on political considerations at the expense of economic criteria. It also created a precedent for a much bigger mistake two years later, namely Greece's acceptance into the eurozone.
Instead of waiting until the economic requirements for a common currency were met, Kohl wanted to demonstrate that Germany, even after its reunification, remained profoundly European in its orientation. He even referred to the new currency as a "bit of a peace guarantee."
However, the Kohl administration cannot plead ignorance. In fact, the documents show that it was extremely well informed about the state of Italy's finances. Many austerity measures were merely window dressingeither they were accounting tricks or were immediately dialed back when the political pressure subsided. It was a paradoxical situation. While Kohl pushed through the common currency against all resistance, his experts essentially confirmed the assessment of Gerhard Schröder, the center-left Social Democratic Party (SPD) candidate for the Chancellery at the time. Schröder called the euro a "sickly premature baby."
(Excerpt) Read more at spiegel.de ...
The European Commission's top economists warned the politicians in the 1990s that the euro might not survive a crisis, at least in its current form. There is no EU treasury or debt union to back it up. The one-size-fits-all regime of interest rates caters badly to the different needs of Club Med and the German bloc.Captain Obvious is turning into the prophet that nobody listens to. The audacity of this scheme is astounding.
The euro fathers did not dispute this. But they saw EMU as an instrument to force the pace of political union. They welcomed the idea of a "beneficial crisis". As ex-Commission chief Romano Prodi remarked, it would allow Brussels to break taboos and accelerate the move to a full-fledged EU economic government.
... unintentionally left out the California legislature & all the parasites in Sacramento in that post. Californian’s need to put the bong down, wake up, and ask is California in any better shape than Greece? I love this state and it’s tragic and stressful seeing it twitching from the massive spending overdose that continues largely unabated.
/end of rant
One always assumed they knew -- they had to. It's somewhat of a relief to finally confirm it. They weren't stupid; just dumb.
Thanks Olog-hai. The Euro will last a thousand years! ;’)
Thanks for the ping.
Consider who taught Italy, and who was looking the other way. Says it right in the quoted paragraphs.
No, probably not. I only meant that they were dumb enough to think they could make it all work in the end despite the understood problems.
They never thought it could all work in that form. They were counting on it not working so that they could implement the Plan B they were bragging about openly in the 90s.