German Power:The Price for the Euro?

There are only two ways that the euro can go forward without risk of disintegration. The first is political. The second economic. Both are linked.

The reality is that in any economic structure, the most powerful segment dominates. Germany is the biggest, richest and most competitive economy in the eurozone. The German people have, over the last hundred years, gone through hell and back to get there, on the way being gripped in the Nazi era with a collective insanity. More recently they had to suffer severe economic pressures from re-unification and reorienting their economy for the challenge of globalisation.They did this. They are now successful, with the most stable democracy and most successful economy in their history. The German economy is now the foundation of the German state. It has replaced the military tradition as the guardian of national security. Its virtues are thrift, moderation and hard work.

German voters will never support the idea that a large part of their accumulated wealth (their security) be used to pay the bills of those who spend above their means, work short hours, retire in middle age on full pay and expect to grow rich by simply buying a house. They will not prop up governments who bribe their voters with living standards founded on the never never, using money borrowed cheaply because of German credit worthiness. They will pay, but only if those countries in need, do it their way.

Thus it is a fact, from which there can be no escape, that if a country supports the euro and wants to be in it, it will have to accept the surrender of its economic sovereignty to German direction. The euro was conceived as a means of hobbling the power of a united Germany, but was given birth without the necessary democratic structure to control it. The outcome is that its control is in the hands of the strongest economy and German power in Europe is now absolute. The message is fall in line if you want our money.

Given that the voters of southern Europe will never elect  governments with a mandate to submit to the kind financial discipline inherent in the psyche of the north, there is only one other solution which will work. This is that Germany herself leaves the euro and returns to the mark. This would leave the indebted countries dominating the common currency which would promptly devalue by about 60%. Their debts would become manageable, their economies competitive and they would start to grow. German banks would take a haircut but their people might think it a price worth paying to rid themselves of the problems of the southern profligate for good. France would become leader, with Italy as deputy, of euroland and their economies would take off.

If neither of these solutions finds favour, the irrational faith in fudges and firewalls, declarations and summits, which are all that is on the crisis menu at present, will do nothing to halt, though it may delay but not now for long, the inevitable crash to smithereens of the euro. The end was written in a beginning which failed  to understand the fundamentals for establishing a successful currency. The democratic majority, if it ever existed, to set up such fundamentals has now gone, broken by unmanageable debt and unbearable cut backs. People are hungry. Some are near starving. Time has run out.

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