Goodbye Euro?

Kinglear

The minute the rules were relaxed to allow more than 3% budget deficits the Euro was doomed. Of course, that assumes the figures were real in the first place, which, in probably all cases except Germany's, they were not...
Oh and by the way, Our own wonder bigot, GB himself, when he sold the gold bullion, bought Euros....

Naomi Muse

Daniel Korski - depressing to see this.

Thank you for your analysis. I could never see how the Euro could remain viable without having a central/federal treasury to control it all.

The US has the Fed and that's why the $US is stable within the 52 states.

Without that there is no governor or regulator to ensure the function of the currency.

As such, therefore, the only option for the PIIGS is potentially to leave the Euro, revert to their previous currency or a new one, and then buy back into the Euro at a later date and a far less attractive rate.

As this is the only method available to govern and regulate the currency, it has a hugely detrimental effect on the well-being and effectiveness of the state in question as well as all other Euro nations.

The stability of a country's currency is part of its national psyche.

If we add on Portugal and Spain to Greece and then Ireland and Italy, the ability and effectiveness of the MEPs representing those countries together with any commissioners is lessened because of the practical and psychological impact too.

Greece withdrawing, licking its wounds and rethinking its position is likely to then withdraw from the EU to save the money that it now has to contribute.

The impact of that will further destabilise the other EU nations and it becomes a domino effect, as far as I can see.

Why, oh why did they go for the Euro as a common currency without putting a central federal regulator or treasury in place?

The only reason has to be political and that is that the politicians did not think they could get it approved by their electorates.

Greece might well be far better off withdrawing from the Euro and then from the EU. After the years of inward EU investment into its infrastructure it was bound to be living above its means.

DZ

Don't hear much about devaluation, do we? But surely the financial authorities here (in UK) are considering it, or should be. A nice crisp devaluation without devaluing the pound in your pocket? It solved problems before, the politicians told us, so why not again?

And why should the Euro be immune to devaluation? All fiat currencies devalue, they have to, in order that the illusion is maintained. So, come un Brussels, devalue your way out of this one.

Perry

But what else could ever be expected?

The EUSSR is characterised by

Obfuscation
Dissimulation
Fabrication
Imagination (as in making up fairy tales)
Stagnation
Limitation

How could it (the EUSSR and its component parts) ever be expected to work?

Chuck Unsworth

Goldman Sachs, eh? Any connection between their predictions and the current attacks on GS?

General Zod

The lessons cannot be underplayed, Daniel.

The county that reduced PIIGS to PIGS, Ireland, shows the deceit/blind optimism/stupidity behind the mantra that to cut too soon will endanger the recovery. Ireland has cut savagely and, as a result, has been rewarded by the bond markets with significantly narrowed spreads over Bunds.

If Germany were to hold a referendum on Euro membership, there would be a healthy majority in favour of an exit.

Fifteen years ago, I was still an enthusiast for the Euro. Five years later, living in Germany and aware of the creative accounting being undertaken by the PIGS to qualify for membership, I changed my mind. In 2001, I still thought Hague's position of "never" to be intellectually insupportable, given that there was still a reasonable chance of success for the Euro and convergence of economies, but the actions of the PIGS finance ministers over the ensuing decade, together with the monstrous follies committed by the moron who still has a week left in Downing Street made it obvious to me that this country must never join the Euro in the foreseeable future.

Adrian Sells

The Euro has been doomed from the outset: you can't have monetary union without political and fiscal union.

Ed P

With their own elections looming, perhaps Germany will leave the now rather shaky Euro rather than bail out the Greeks? I'd like 95% of my final salary when I retire at 61 too, but such unsustainable largesse from a socialist state was always going to fail.

John Stapleton

If we believe the IFS, the Conservatives actually have a LESS credible fiscal reduction plan than the other parties.

Yam Yam

Thank you for your honesty, Daniel.

You may have been a fool to believe in the Euro (which, after all, was always a 'political' as opposed to an economic project), but you are not obliged to be a fool forever.

sandy

Fingers crossed Cameron does not miss Clegg tonight on this issue,potentially the most toxic for the Lib Dems.

Their immigration policy is a joke but hard to pin them down on.

On the Euro it's simple.They think we should join it.Most of the country thinks otherwise.

Cameron must nail Clegg on this so that no one watching does not understand the full extent of his folly.

Fatbloke on tour

DK

You are the new Kate Adie, everywhere you turn up leads to a disaster.

Given the right wing mentalist anti EU attitudes that pass for the Speccy consensus it will be beyond Irony if AM / Germany break up the Euro zone.

So much for the Euro leading the the fourth, sorry fifth Riech.

As you note Germany is to blame for this issue spiralling out of control, specifically AM playing cheap politics with the issue.

It is all too easy to get cheap votes playing to the gallery of German stereotypes about South European governments and people. If AM was playing German politics with the issue then she needs to get the dictionary out and find out what being a stateswoman actually involves.

If she actually believes it then the Euro zone is doomed.

Germany has the largest economy in Europe, Germany has the best credit rating in Europe, but Germany should also realise that it has the largest export sector in Europe and the soft Southern Europeans buy lots of BMWs.

Consequently the danger lies within the Euro zone, Germany will need to learn what leadership is all about.

I suppose if all else fails GB will be asked to sort it out, he is giood at that sort of thisg, Dave the Rave would only be worried about his holiday home and Cleggy would want to preserve the wifes inheritance.

Consequently sort it out would you GB, you are good at getting 60+ year old women to change their views to your way of thinking.

Just tell SKY to take a hike.

PayDirt

So the Greek Govt will just have to start printing drachmas again and pay its creditors with these, simple really.
I believe a lot of these Eastern European countries have a two-tier currency: people try to deal in Euros as much as possible but actually get paid in local currency. What's so difficult about that?

Kevyn Bodman

I would like to be able to say that it is none of the UK's business because we are not in the EU. (This will affect the EU,not just the Euro zone.)

But our devious,deceitful and cowardly politicians will never give us a say on in/out of the EU so I hope the EU collapses, and I hope the ending of the Euro brings that day closer.

So I am optimistic,not pessimistic, that the Euro will collapse.

In tonight's BBC Leaders' debate I expect some vigorous attacks on Clegg for his party's position on the EU and the Euro.

Moraymint

Anyone else experiencing the deja vu that I'm having here?

This all feels unnervingly like that period in the run up to the climax of the (almost) banking collapse when there was a real chance that ATMs would fail to dispense cash.

Since the Northern Rock/Lehman crises hit the streets, I've always felt that the sequence of events we're witnessing now was pretty much guaranteed to come about for as long as governments undertook to prop up a fundamentally flawed financial system.

Bailing out the banks on the scale that governments did and then expecting taxpayers and, er, banks and other lenders to then prop up the governments propping up the, er, banks was always a bit like trying to build a perpetual motion machine.

At the risk of doom mongering, it's very difficult to see how this is not going to turn into a rout.

I own and manage a small business in the UK. This year will make or break my company and, without wishing to put too fine a point on it, if the UK economy tips down again, I face ruin.

It's hard to see how Europe and the UK can possibly avoid another (massive) lurch downwards if/when Euro nations default, one after the other.

I don't have a good feeling about all this at all.

Rhoda Klapp

Was there no contingency plan? When sceptics predicted exactly this kind of trouble as a reason for staying out, years ago, and were shouted down, what did the believers think of that criticism, or did they dismiss it out of hand?

Can we in the UK learn from this? It seems to me that we have to do some pretty drastic pruning, which none of the parties will talk about, or go the way of Greece. We certainly ought to cancel or postpone things like green taxes and restrictive regulation. But even the tories plan to put climate change policies in the first Queen's speech. They (all of the big three) have no policies to get us back to sanity.

Snowman

Adrian Sells @ 9.49:

Exactly right

Lizzy

I don't know why you're depressed about it Daniel it's a cause for celebration in the end.
The Euro was doomed from the start as it needed a completely federal Europe controlled by a central finance minister and a central bank.
This would be totally unacceptable to nearly every voter in Europe - not just we Eurosceptic Brits - and the politicans knew it.
Having spent many years on business in Ireland, Spain, Portugal (to name but a few) I recall vividly the anger onthe ground when the Euro was introduced and prices rocketed almost overnight.
If you look at, say, the motorway networks and other public projects that many of these countries have benefited from it is obvious the EU has been good for them. But political and fiscal union - NO!
Europe has also destroyed our fishing industry and the CAP is just sheer madness and if we take a look at the lady in Rochdale yesterday (thank you Gillian for finally exploding this one) European immigration (alongside that outside of the EU) to the UK has seriously undermined the fabric, cohesion and security of these islands.
All the electorate can see (as far as the UK is concerned) is one long line of failed politicians - Mandleson, the Kinnocks, Baroness Ashton heading off to Bruseels and coming out at the other end with fancy titles and millions in their bank accounts.
I have a long running bet with a Eurofanatic colleague that the EU would implode under the weight of its own incompetency. I always thought it would be 50 years hence but I now think it will be soon and most decidely in my lifetime.

Dorothy Wilson

Some of us have been predicting this since before the euro was launched. In fact, several - including me - have been conducting an on-going debate in the letters column of the Nottm Evening Post with the mafia from the European Movement about the follies of the euro since the early 2000s.

Whilst nobody should wish the economic earthquake that is about to hit the eurozone on any country, I can't help feeling a little sense of satisfaction that our views have been vindicated.

Tony E

Adrian Sells hits the nail on the head.

Political union was what this was all about. The first Eurozone financial crisisi was suposed to be the lever to create a total financial union, rather than a currency union, which would have been the largest step to take in enacting the truly post democratic age. No country would have a final say over its budgets in the Eurozone.

However, the crisis was larger than anticipated because they allowed the debt boundaries to be drawn too wide. 3% defecit relaxed, but not to 5% or 6% but allowed to become 'whatever you like but just don't tell anyone!'

I ask the German and French euro-enthusiasts who thought thay could mould an empire in their own image: How are you enjoying the spoils of your victory?

Vulture

Twelve 'I' 'my' and 'Mes' in your post Daniel. The economic crisis is really all about you, isn't it?

David Ossitt

"I have regrettably come to the conclusion that the Euro is probably done for"

Many of us have been of that opinion from the very start.

The next edifice to crack will be Euro-land itself, built on a foundation of lies.

RKing

I really hope that this is the demise of this artificial trading/political excercise brought about so that a few countries can have political and economical dominance over the rest of europe.

The sad thing is that the working classes will pick up the bill for this futile exercise and the likes of the Blairs have creamed off riches beyond our imagination.

Let's get rid of this hopeless attempt of unity and get back to reality where each country controls it's own destiny.

The EU is and always was a big fraud!!

paulg

Well it seems you have finally seen sense. As much as we would like to gloat,the sense of satisfaction is mitigated: as the euro chumps have left the continent in a terrible predicament.

It is human nature to blame some one else for any suffering that people have to endure: thats why we have tribal and class politics.

Its much worse when an entire nation looks around to blame someone else, i.e the Greeks blaming the Germans.

The IPGS countries have grown their economies on a mountain of cheap debt, an unsustainable phenomena. Consequently, the standard of living in these countries is going to fall and, they will be blaming the Germans.

The Germans won't be able to export due to lack of demand and, their people are going to suffer as well.

As the continentals have no great history of culture of settled democracy they will all be open to demagogues playing xenophobic cards.

the constitution of the EU is a receipe for disaster and you would be either a knave or a fool not to see it.

You europhiles have open a can of worms and, you may not be able to shut it again.

The EU is a remote and undemocratic entity and if people start seeing it as a source of all their problems, undemocratic entities that stand up for their rights, will not seem such a bad option.

Holly ......

A journo finally catching up with the public
How quaint.

Liz Brown

Time to put out the bunting???? Can we please have the collapse of Yurop next

mongoose

Welcome to the club Mr Wide-eyed -dreamer!
I pity Merkel and the Germans. She should call the bluff of the disreputable -schemers, whose ploy to lock the Germans in and expropriate their admirable D-mark now yields its just rewards.
It was always the case that the new currency's test would come when times are hard. A bail-out will just undermine the Euro's credibility. If Greece can't take Mutti's tough love it may have to visit the pawnbroker.

Robert Eve

If the Euro goes hopefully it will take the EU with it.

Rhoda Klapp

Is Fatbloke positioning for Gordon's post-PM role as an international bank boss? Ha Ha.

Fatbloke, do you understand how hard it is to sell to the German voter that he/she must pay so Greek five-a-day coordinators can retire at 50 on 95% of final salary? Angel Merkel understands, and she has a Land election in NRW next month.

Andy Carpark

Should that not read

'During my trip, officials, journalists, and key advisers to both Prime Minister Papandréou and Chancellor Merkel met me.'
?

Paul B

Oh deep joy. One in the face for those who in their supercilious and condescending way, told me it was inevitable that one day GB would join that Euro. That I was xenophobic little Englander for saying it wasn’t.

It gives me no pleasure to see Greece going down the pan, I have enjoyed many holidays on their beautiful Islands, but it gives me a great satisfaction and a warm glow to put one finger up to those who have patronised me and all those like me in the past.

Rejoice.

Any Colour but Brown

The Germans are going to be unwilling to bail Greece out as they are still paying for unification. There is an income tax, called Solidaritätszuschlag of up to 5.5% of income.

The Euro was the single worst thing to hit the German economy since Wiemar. It caused 100% inflation, although you'll never see figures that will accept it. When the Euro came in, many price tags were simply changed from "DM" to "EUR" overnight - even though the exchange rate was 1.95:1. Many started by being honest, but, when raw materials were jumping by 100%, the rise had to be passed on. The politicians can spout all the want about "official" inflation rates, but they are nonsense.

I was living in Germany during that period and saw first hand what happened. Britain should be very pleased that it is not a member of the Eurozone.

PayDirt

The Greek Govt will just have to start printing Drachmas, then all those Germans can get a good exchange rate on their holiday money and have a swell time in Greece. A bit like the rest of the world coming to the UK to buy anything of value in cheap pounds sterling.

DavidDP

"And, second, the Liberal Democrats’ talk of the UK joining the Euro at some point is not only economically illiterate but may be downright dangerous for Britain’s economy "

It's also illogical. They've accepted that there are times, now being one of them, that being in the Euro is not economically advantageous. Yet they propose taking us in at the first time it becomes advantageous to do so. What happens when it becomes a problem again?

Percy

@Rhoda Klapp
Don't worry Rhoda dear, house prices are up again we are all saved.

Dra(ch)ma

Daniel, the "legal niceties" you mention are about the illegality of member states bailing each other out (see Art 123-5 TFEU). Perhaps if the member states had observed another "legal nicety" - the Stability and Growth Pact - they would not be in this mess. I know that rules don't matter in your cosy, post-democratic, transnational utopia where the people are never consulted and the leaders are never elected. But you may need to revise that stance soon.

Naomi - you may need to count the number of US states again.

Michael

Thank Goodness for White Wednesday!

Sir Graphus

This confirms what has always been said about the Euro; that it won't work without full financial union, a powerful central bank, and tax harmonisation.

You can see how the European powers that be might reach a different conclusion from this than Coffee Housers.

stephen

I hope Dave sticks it to Clegg on the Euro tonight and really get down in the gutter on this one. He needs to take Clegg out on this. Sadly both Dave and Clegg are both posh although Clegg with his West End Cockney is IMHO more rebabative in debate[see Dominic Lawson's recent piece in the Times]. It's time Dave developed as sharp elbows as this product of an elite London school. As Lawson says in his piece their two schools have few differences Dave's is a four letter word Clegg's is not Ha Ha

John Adlington

Cam has to hammer the fact home that one of the parties rode the productive economy like a bitch for 13 years leaving it broken and spent and the other would have left it in the clutches of European Central Bankers which would arguably have been worse.

A big Tory "I told you so" is in order.

oldtimer

It has been obvious to many for a long time that one shoe will not meet all sizes of feet. The Euro is but one aspect of this. There are numerous other aspects of the Euroland project where this is also true. The difference is that the Euro currency, and Euro politicians, cannot escape the discipline of currency markets. For the rest, they are buried in the obscure verbiage of the Lisbon treaty.

It is also a fact that the people of postwar Germany had, and still appear to have, an obsession with sound money. Post WW2 they were all deeply scarred by the hyper inflation of the Weimar Republic and the consequential rise of Hitler. Joining the Euro was a very significant act of faith and political will, wrapped up in the various provisions on deficit (3%) and debt (60%) levels that were supposed to preserve sound money. They were sold down the river. In that sense, German voters have been betrayed by their politicians. They would be better off out of the Euro and reverting to the DM. That would probably be a better solution than Greece exiting the Euro. The new DM would rocket in value vs the Euro and that revaluation would start the long process of reducing the trading surpluses that Germany presently earns. Just as the same revaluation needs to occur with the China`s renminbi.

denis cooper

Daniel, now you've really annoyed me, and I'll have to cool down before I post anything substantive beyond this - why did your father, or whichever ancestor, come to this country in the first place, and why now do you now show so little gratitude and respect to the descendants of the people who then gave him the protection he was denied in his own country? Like so many I could name - descendants of immigrants who then turn against the host population to which they owe their liberty, and in many cases their very lives. Either whole-heartedly join us and become one of us, or if you don't want to do that do the decent thing and go back to where your family came from, and help sort out the problems of that country. I don't mind which you do - there are many descendants of recent immigrants who are 100% loyal to this country, and no doubt you're a decent enough chap in other ways - but bloody well decide where your loyalties lie and act upon that.

Norman Dee

When Greece joined the EU,my immediate comment was "just what we need more lemons and olives" because it was never anything but a political move. The of course ignoring all sensible business practise all these countries were admitted to the Eurozone without due diligence, just accepting their word that they were fit to be in it.As it turns out it wouldn't have mattered becaues whenever any of the countries got into trouble they just changed the rules, especially if it was France or Germany (I made them, so I can break them !)

Naomi Muse

Moraymint - I share your bad feelings about this. I too run a small business and it is meant to be the engine for my and a few other lives.

Political incompetence combined with chasing rainbows have not helped any of us here or in Greece or the other nations in similar situations.

Julian The Wonderhorse

Let's remember citizens fromm the strong economies never had the chance to vote for the Euro, only those from the weak economies. The German people would never have voted for such a crazy, power mongering scheme as this dreamt up by the supra-national elite.

denis cooper

@ Julian the Wonderhorse -

Unlike the British, the French were allowed to vote in a referendum on the Maastricht Treaty.

denis cooper

"Presumably the Greek Central Bank head would still sit on the Governing Council of the ECB"

I can't be bothered to check the details, however I think probably so but with restricted or no voting rights.

Wily Trout

Credit where it's due, it was Broon who kept us out of the Euro when Blair was itching to stick us in.

allectus

"... I have regrettably [sic.] come to the conclusion that the Euro is probaby done for ..."

Don't you mean "regretfully"? "Regrettably" implies some form of censure of what it qualifies, in this case your "coming to a conclusion". Since it appears that you simply wish to express your sense of regret at the prospect of the demise of the Euro, and not that your coming to this conclusion was in itself regrettable, "regretfully" seems to me appropriate. Thus Gordon Brown's "candid remarks" yesterday were regrettable, but his subsequent insincere apology was regretful.

denis cooper

"talking about legal niceties"

and

"It would also be illegal according to German law"

It would not just be illegal according to German law, it would also be illegal according to our law.

How many times does it have to be said that Parliament has incorporated the EU treaties into our national constitution, as recognised by Lord Justice Laws in the Metric Martyrs case when he classified the European Communities Act 1972 as a "constitutional statute"?

It follows that if any UK minister or official is complicit in any breach of the EU treaties and laws then he is necessarily breaking not just the EU treaties, but (far more importantly) our national law, unless he has been explicitly authorised by Parliament to disregard some part of the treaties and laws "notwithstanding the European Communities Act 1972".

I can't decide whether our politicians of all three main parties are just too stupid to understand this, or they understand it perfectly well but have no respect for the law and hope that nobody else will notice that they're colluding with illegality.

Our Parliament approved the Maastricht Treaty without being able to change as much as a comma, on the clear understanding that Economic and Monetary Union would NEVER lead to EU member states bailing each other out, because clauses forbidding any such bail out had been deliberately inserted into the treaty.

These are not what you so dismissively describe as "legal niceties", Daniel - they are part of the EU treaties, which are part of our national law, specifically and explicitly intended to prevent what is now being planeed ever taking place.

So the question is whether you believe in the rule of law, or whether you would prefer arbitrary rule where the rulers may rigorously apply, or simply ignore, whatever law they choose.

This is where I start to get really angry with you, because it was my ancestors not yours who fought a cruel and bloody Civil War over this, and it was my ancestors not yours who finally cut the head off one king and drove another from his throne over this, and it was my ancestors not yours who again and again put their lives on the line to protect the rights and liberties secured through the blood of their ancestors, and then along comes your family to be saved by and to enjoy those same rights and liberties which had cost the English so much, and apparently you couldn't care less and would throw it all away as just "legal niceties".

Osred

RE:Fatbloke on tour 29th 10:06am

You could have saved yourself time and just typed 'The German people have forfeited the confidence of the Commission'

Beer Moth

Rhoda Klapp

BBC R4 had some Greece expert on this morning who, when quizzed whether there were civil servants over there, retiring at 40!, replied with audible reluctance, 'Yes'.

Like Duh

What do you mean regrettably? I look forward to your next trip to Greenland to discover that Eskimos, I mean Unuit, won't eat yellow snow.

John Richardson

"I can't decide whether our politicians of all three main parties are just too stupid to understand this, or they understand it perfectly well but have no respect for the law and hope that nobody else will notice that they're colluding with illegality."

Exactly.
Succinctly put Mr Cooper.

Sometimes, subtle expression via a blog is neigh impossible...however, I wonder if by, 'can't decide', you infer 'can't face' ?

I would suggest the vast majority of the UK population, 'can't face' the reality of, 'our politicians of all three main parties'.

Sometimes I do not blame the majority.
Sometimes I recall that cattle will be treated like cattle...

Perhaps it will take the delibarately engineered poverty of 'Green' Taxes to make the herd/busy individual, look up and notice their own enslavement ?

Anyway, I thought your above effort, in it's entirety, was superb.
For what it's worth.

LoachDriver

Contrary to the expressions of dismay over the probable demise of the Euro, it presents an opportunity for the discarding of valueless fiat currencies. Henceforth, if it's not good as, backed by, gold, it's rubbish. Fiat currencies, like much of modern economic theory, have proven to be so much humbug, literally not worth the paper on which they're printed.