Posts filed under ‘european union’

The Telegraph predicts the demise of the Euro?!

This whole wordpress tag surfer thing is quite useful, and resulted in my stumbling across a blog quoting a Daily Telegraph piece suggesting we may soon see the imminent demise of the Euro on account of the ‘credit crunch’. Now, in my book quoting an opinion article about the possible demise of the Euro from the Daily Telegraph has about as much persuasive strength as quoting an IT columnists (bar the token, John Waters) about the evils of Bertie Ahern.

But anyway, while the Telegraph’s author expends some energy going on about the differences between various EU states with regard to inflation, but as to be expected, the real reason is a dislike of that whole European concept;

Could it happen [the Euro’s break-up]? Why not? Every other currency union in the history of man has broken up – unless, like the US and UK, it has been preceded by generations of political union, and held together with a federal tax system.

It sounds far-fetched, I know. But the ultimate victim of this sub-prime crisis could be nothing less than the single currency’s existence.

See, all other currency unions have broken up previously unless there was a strong political union and a federal tax system. Therefore, this one will too. Kings have always ruled us, therefore they will always rule us.

In an ever increasingly globalised financial world the only solution is to be tied to one of the major currencies. While sterling can hold its own to an extent (by fluke of London’s history more than anything) for nearly every other European state a break up of the Euro would mean a reversion to following the D-mark, and the occasional cycles of devaluing against the D-mark to gain superfical advantage for short periods and paper over long-term difficulties in national economies. For that, Europe’s political elite will continue to support the Euro (outside of possibly Italy), and the currency’s popularity amongst most Europeans will remain untouched.

Indeed, the credit crunch to date has been a positive for the image of the ECB, in particular in contrast with the actions of the Bank of England. Northern Rock, anyone?

December 2, 2007 at 8:02 pm 1 comment


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