Skip to comments.Eurozone crisis: United States of Europe may be the only way to save euro
Posted on 06/04/2012 6:36:59 PM PDT by MinorityRepublican
It is a measure of the speed at which the politics of the euro crisis is changing. Only a fortnight ago all the attention was being lavished on France's new president, François Hollande, being sworn in in Paris as Monsieur Growth and rushing off on his first assignment to challenge Europe's Frau Austerity, Chancellor Angela Merkel.
"We need new solutions. Everything's on the table," Hollande pledged, meaning he would force Merkel to remove the noseclip and consider things that give off a foul odour in Berlin, foremost among them eurobonds Germany solving the crisis at a stroke by agreeing to underwrite the debt of Spain, Greece, Italy and all the rest. Fat chance.
By Saturday the growth versus austerity contest had receded as Merkel turned the tables on Hollande.
It was her turn to declare there should be no taboos in grappling with the hard options facing Europe's leaders as they wait to see what will happen in Greece and Spain, and plot their next moves at what is shaping up to be a momentous summit at the end of the month.
Merkel appeared to be calling not only Hollande's but France's bluff. By announcing there could be no censorship of the eurozone to-do list, she meant tabling radical, federalist steps involving gradual loss of national sovereignty over budgetary, fiscal, social, pensions, and labour market policies with the aim of forging a new European political union over five to 10 years.
The USE United States of Europe is back. For the eurozone, at least. Such "political union", surrendering fundamental powers to Brussels, Luxembourg and Strasbourg, has always been several steps too far for the French to consider.
(Excerpt) Read more at guardian.co.uk ...
The Guardian, haha...the New York Slimes of London.
I can not see this happening within my next 20 lifetimes.
Now that’s a hoot. It will be far more stabilizing if the EU backs down and lets the PIIGS (Portugal, Italy, Ireland, Greece and Spain) have a “time out”, to get their monetary systems in order before coming back in, if they can.
This can be done monetarily much like the monetary recovery of the Weimar Republic (before unfortunately the Nazis took over). Their hyper-inflated fiat currency, the Papiermark, needed to be converted to a new, stable, gold backed currency, the Reichsmark. But to do this, they had to use an intermediate currency called the gold backed Rentenmark, as a buffer.
The Rentenmark was not a “street” currency, but would only be used by banks and financial institutions, and government, and then under strict rules. It stabilized the institutions and neutralized the Papiermark, so that when the conversion to the Reichsmark happened, it was a stable and secure currency, neither deflating nor inflating.
The way this would work with, say, Greece, would be for the rest of Europe to keep the Euro, Greece to adopt its old currency, the Drachma, yet commerce between the EU and Greece would be by a gold backed European Central Bank (ECB) currency, let’s say called the “Greco”.
Anything Greece could export would be sold in Europe under a set price, better than the market price. The profit would go both to stabilize the Drachma, and to reduce their national debt. Then commodities produced in Europe *in excess* (especially food), could be sold to Greece at a deep discount.
This way, Greece would be earning more than could not be spent, but only used to stabilize their balanced budget Drachma; and they would be spending less for necessities.
Any “austerity” they had would be because they did not have the Drachmas (and nobody would lend them money), and their Drachmas would only be stable if they printed just enough.
A link on G7 and Spain (Greece probably to fold, then Italy) ... http://news.yahoo.com/g7-hold-emergency-eurozone-talks-spain-top-concern-172150142—business.html
That scenario is premised on the condition that Greece could not interact or trade with anyone in the rest of the World.
Not bloody likely.
So, the Eurotrash expect the Germans to pay for the profligate wastage of countries like Greece, Spain, Italy, Ireland, even France?
Thanks for the late night smile, folks.
Question: Who ruled France best?
Answer: The Germans.
Actually, no. Greece could freely trade around the world, but nobody would want to trade with Greece except for on the barrel commodities swaps and non-Greek currencies.
This would speed up the process, because many Greeks now hold all their savings in physical Euros, having taken their virtual Euros out of the banks for fear they would be converted to unprotected Drachmas at a poor exchange rate.
The faster they spend these Euros and have no choice but to go to balanced budget Drachmas, the faster the recovery process can begin.
All government payments to individuals would be in Drachmas, and by Gresham’s Law, “Bad money drives out good”, everyone would want to spend Drachmas and save Euros. Yet except for private transactions, Drachmas would be the only legal tender in Greece. While banks and the government would accept them, once they had them, they would be valued as Drachmas. The physical Euros would then convert to Grecos, and be an ECB controlled currency, which would work to Greece’s advantage. But again, bleeding Euros out of Greece.
Back to the Weimar example of this, the end result, the Reichsmark, was so solid a currency that it lasted the duration of the war, and even the Nazis refused to mess with it, other than to change its appearance. And its successor, the Deutschmark, based on the same principles, was a strong currency until the conversion to Euros.
The empire that nobody but the elites want.
If you think that Germany is not itself guilty of “profligate wastage”, think again; they have the same “social market economy” that the Treaties on European Union force upon the other member states, and their economists utterly hate the US free market system. They were known as the “sick man of Europe” until the mid-2000s, and they didn’t suddenly get where they are because of any kind of work ethicthey couldn’t. The euro was designed to trigger the very crisis it’s been going through since 2008, and it was also meant to drag the USA down with it.
Why do people still not get the fact that the people who designed the EU and the euro currency are fanatics . . . ?
I wouldn’t call them fanatics, as it implies they have a deep emotional commitment to something. Instead I would put it down to a combination of naivete; a craving for the “good old days” of monarchy punctuated with a great loathing of their former nobles; an utter lack of understanding of why and how America came to exist, etc.
They desire unelected elites to rule, federalism among nations with people who have vastly different cultures, languages, and legal systems, the welfare state, and after 1500 years of almost continual war, they are terrified of it, and reject any reason for it.
It is like the fantasies of abused children who crave a normal life and abundance, and think that by superficially mimicking a healthy and happy family they will become one.
His fingerprints are all over the FaceBook debacle.
Where the hell is Ragnar when you need him?
He's taking a well deserved break at Galt's Gulch after his behind the scenes work in Wisconsin. He fit in well with the Cheeseheads. lol
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