Tue, Jun 12, 2012 - Page 9 News List

The euro is as deadly as the Black Death, but gets off scot-free

Experts attribute Europe’s crisis to heavy debt, insufficient austerity and the need to cede power to Brussels, overlooking the root of the problem: a single currency

By Simon Jenkins  /  The Guardian, LONDON

The coming of the Black Death to 14th century Europe meant the church needed someone to blame. Since God was exonerated ex officio, the obvious culprit was human sin, though some theologians favored Mongolian hordes, the waning power of Rome, not enough austerity and the alarming junction of Mars and Saturn in Aquarius. No one thought it was just a plague.

The same is true of today’s Black Death: the euro crisis. Pundits attribute its woes to wicked debt, insufficient austerity and the need for more power to Brussels. Were Geoffrey de Meaux alive today, he would also blame Venus’ transit of the sun. As in the 14th century, these wiseacres assure us that redemption will come from giving more control to superior authority and from a more drastic austerity than any yet attempted. National self-flagellation is also much recommended.

As for the euro, like the black rat, it gets off scot-free. It survives every debacle as that apogee of dogma, a “good idea in principle.” A generation of European politicians have worshipped at its shrine and they are now too old to recant. To be “for” the euro was to be progressive, international, indulgent of the rich and munificent to the poor. It was a symbol of futurist sophistication, waved like a holy rood in the face of crabby, narrow-minded euroskeptics.

I remember attending an EU conference in Luxembourg in the early 1990s and questioning the aptness of a common currency to a continent of widely diverging economies. A look of horror crossed every face, as if I had questioned the virgin birth and resurrection in one. Could I not understand that a single currency would “level up” the whole European economy to match German efficiency? It would force the weak to become competitive. It was the cement that would bind a European superstate.

Those whom history proves right are warned never to cheer. It is always “too soon to tell.” But when I think back to the smugness of those well-fed, unaccountable, untaxed Eurocrats, I am not surprised at their aloofness in still wanting to inflict their dogma on hapless Greece and Spain. How else could the untaxed IMF Managing Director Christine Lagarde stand up and accuse Greeks of not paying taxes?

A currency fashioned to enrich German exporters and ensnare Mediterranean nations in German credit was never going to work. Single currency zones are fragile, short-lived constructs. Their supranational governors must enforce equalization of labor costs, or tax and cross-subsidize on a massive scale. It is a short route to German Chancellor Angela Merkel’s fatal concept of German commissars in Athens’ ministries.

From the moment the euro entered circulation in 2002, the eurozone’s collapse was only a matter of time. Yet its authors still deny its faults, intoning the need for more austerity and more indebtedness through new eurobonds. At its core remains the heaving ghost of an undervalued deutschmark. The German financial-industrial complex is as dependent on the euro as the US military-industrial is on war.

Humankind, said TS Eliot, cannot stand too much reality. An intriguing debate on the euro took place last week on the BBC’s Newsnight, between two US economists, Paul Krugman and Ken Rogoff. Once the BBC’s in-house pundits had departed screeching “inconceivable ... catastrophe ... disaster,” the two men got down to business.

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