Consider a currency that begins with the letter E……
For over a year now it seems like the Euro has fallen down the rabbit-hole. Politicians in Brussels appear to move from one surreal chain of events to another. One minute everything is upside down, and the next we are all back on our feet again. Last month all eyes were diverted to the plight of the US Dollar; however the troubles for the Euro were always destined to return.
Whose dream is it anyway?
To fully understand the problems faced, it is necessary to examine the compendium of the Eurozone, which outlines the various events that have taken place since its inception.
The euro was to be the great modernist project; the party of all parties. Through adopting a one-size-fits-all monetary and economic policy, trade would be boosted and cross border commerce simplified. The European economy would be more secure if exchange rates and interest rates where controlled from the centre by the ECB. There would also be pension reform that would encourage the mobility of labour across Europe, making it easier for expats to continue contributing to private pensions as they moved from country to country.
Someone has stolen Brussels tarts
In order to ensure that the Euro cake was sliced fairly, the Maastricht criteria was designed as a series of qualifying tests to admit Member States to the table. It now appears that these tests were neither comprehensive nor stringent enough in their application. A number of knaves amidst the Member States chose to circumvent the rules and were less than transparent about the size of their budgetary problems. Some others were enticed by potions with ‘drink me’ labels emblazoned on them, only for their debt to grow to unsustainable levels.
There have been more than one or two teaspoonfuls of wishful thinking along the way. Attempting to bring Nordic, Germanic, Latin, Celtic and Slavic cultures under one roof is a significant challenge; asking them to abide by strict rules and walk along straight lines was perhaps expecting too much. Indeed, what previously seemed like an opportunity to trade freely now looks like an invitation to the Mad Hatters tea party.
Is it better to be feared than loved?
The Euro appears to have lost its ‘muchness’; alas the European dream with its promise of fraternity and solidarity now seems to be fading. There is no doubt that the architects of the single currency had the best of intentions at the outset. However, eating the cake made certain Member States bigger than their boots; as a result the value of the Euro is now over-inflated.
The two ‘fat boys’ of Europe find it difficult to talk in unison about the real issues surrounding the currency. Like Tweedledum and Tweedledee they make disparate noises about the Euro being defended at all costs, even if it means having countries such as Greece, Ireland, Spain, and Portugal living at ‘wits end’. Meanwhile, directives emanating from Brussels are brandished like ‘the sword that knows what it wants’…..all you have to do is hold on to it!
And yet the problems of the Euro cannot be solved simply by applying evaporating cream. The call of “off with their heads” from certain quarters is not the answer. The Euro is not a figment of our imagination; but who decides where the dream goes from here? Who makes the path?
Here is a list of ‘6 possible things’ for the European Heads of State to consider before their next summit breakfast:
- If you cut a balloon loose, can you control where it will land?
- Will credit rating agencies ignore a Greek default in whatever disguise?
- Can the ECB print more money without turning the Euro into wallpaper?
- Will pension funds persevere and continue to purchase sovereign debt?
- Can the ‘white queen’ of the IMF be the champion and save the day?
- Will there still be a place called Euroland in 10 years time?
And there you have it……..OK, I will just get my hat!!