Nothing much is going on in the Euro crisis. Meetings come and go. Plans are announced and fade away. We are now at the stage where there are planning committees about making plans. Meanwhile the debtor countries are grinding living standards ever nearer to the bone and economic activity across Europe is stagnating. Yet the Euro itself exhibits none of the features of a currency under pressure. Nobody is dumping it big time. Predictions of its collapse appear unfulfilled. This blog has been strident in its declarations about the impossibility of having a currency without a government and the absolute need to establish the institutions to run it.
It is clear that the debtor countries will never be able to pay off their mountainous liabilities without devaluation. This they cannot have, so they either need the ECB to buy their existing debt and cancel it or to be propped up by German money. None of that will happen. Their only option is to leave the euro and devalue to re-establish an economy structured to function within their social fabric at a sustainable level. They may or may not do this. Either way the euro will go on.
This blog would have, in the past, argued that it would not be able to without the implementation of political and fiscal union. This has been talked of and aspired to but nothing meaningful has happened. Why? Because the euro as it has been presented and thought of, imagined and handled, does not exist. The euro is Germany’s currency, managed to the rules, constitution and political preference of Germany and those countries who find it convenient to use it must operate to rules set down by Berlin and Frankfurt.
The European Central Bank can do nothing without the approval of the Bundesbank. The gaggle of European union Presidents are powerless without the backing of the German Chancellor and she has to answer to the German, and only the German, voters. This is not how it was meant to be. This is not how it was thought to be. But it is how it is.
The Euro is safe in German hands. Everybody else has to fall in line. It will be painful. If they cannot stand the pain they will have to step out. Simple when you think about it. No? Well it is if you think in German.