Sunday 19 August 2012 Saturday 18 August 2012 Booker: Germany falling?
With that, the Germans have at last peered into the abyss that opens in front of them as a result of pouring all that money into the coffers of their eurozone partners. And to say that they don't like what they see is a wild understatement.
Reported daily in such papers as Die Welt, Handelsblatt and Der Spiegel, a succession of politicians, financiers and commentators have concluded that, with Greece about to go bankrupt and Spain and Italy to follow, enough is enough.
Most of them argue that Greece must be allowed to leave the euro, and there is popular support for the idea, Many would like to see Spain, Italy and others leave.
So dire has this crisis become – with one senior politician estimating Germany's potential liability at more than $1 trillion – that voices are now being raised to say that the only practical solution to this mess would be for Germany itself to abandon the euro.
This is by no means a new suggestion, but when it makes the front page of Handlesblatt, there is a sense that we have passed to point of no return. And with the German departure, the rest of the eurozone could be left to sink or swim with a currency which, without Germany's backing, would face a massive devaluation.
These are the issues which we have been following on the blog (go to the "archive" link, and then do a search for the keyword "eurocrash") but, as Booker points out, one of the oddest features of this crisis is how little it has been reported outside Germany.
However, we do not need to be too shifty about this. It is not only the British media that has gone AWOL. Most of the European media – and well as the US and the English-speaking world - has been ignoring a drama in Germany which has precipitated an unprecedented torrent over hostile coverage on the single currency.
This is partly because so much is fogged by the public show put on by other European players, notably the Commission and the head of the European Central Bank, to promote the idea that "the euro cannot be allowed to fail".
Without a firm grounding in the history of the project, it is easy to fall into the trap of believing the single currency is an economic project gone wrong, instead of the supreme symbol of the European project's overriding aim, to weld the countries of Europe together in full fiscal and political union.
Furthermore, without understanding the political issues, and that planned development require a major new treaty, with a further massive surrender of national sovereignty, it is easy to be misled by market signals.
However, the likelihood of such a treaty being ratified – since it would require a slew of referendums, several of which would probably be lost – is remote, and certainly not in time to affect the course of the crisis - as Otmar Issing points out in an earlier piece.
Crucially, such a treaty would have to be ratified by Germany itself, and next month her constitutional court will rule on whether the precursor step of the ESM would be a breach of her Basic Law, which forbids any surrender of sovereignty to an outside power.
Not only that, Angela Merkel, facing an election next year, cannot afford to ignore the evidence of the polls – that a vast majority of her people say they have had enough of being expected to bail out their failing neighbours indefinitely. Thus, Merkel herself concedes that the election will be fought over "Europe".
Without question, says Booker, this is by far the gravest crisis the "project" has ever faced. But it is one which it has hubristically brought on itself, with all the inevitability of a Greek tragedy. The gamble it took in the 1990s, to impose a common currency without first creating the political union without which (as was observed at the time) it could not work, is simply not paying off.
As telling as anything in this drama has been the silence of France, under its new president, François Hollande, who, if anything, sides with those who look to Germany to bail them out. Although the pair are to meet later this week, the "Franco-German motor" of integration appears to be dying – and with it the entire project it drove forward for 50 years.
As for us British, despite the "little England rhetoric" of those who argue that Britain can lead the way out of the mess that the EU has become, our politicians sit impotently on the sidelines, largely ignorant of the events occurring in German, and wholly irrelevant.
When the crash comes, though, it will draw us down with it, as in the coming months it makes front-page news across the world. But our politicians, and the "europlastic" community will be the last to realise – and completely unequipped to deal with the consequences.
The most likely outcome, it seems, will be that Britain will be the last country left in the EU, long after all the other members have departed, still obeying all the directives and regulations, and sending off our ministers to Brussels for their orders.
And the most likely trigger of the collapse will be Germany, a country which is finally recognising that membership of the EU is incompatible with democracy and, unlike the UK, looks set to do something about it.
COMMENT THREAD
Richard North 19/08/2012 Eurocrash: how times change
Leaders of British small businesses, we were told, believed "the euro has been a success by a margin of four to one". This was according to a poll carried out by YouGov, which also found that "a clear majority believed the currency had a long-term future and that Britain should keep open the option of membership".
Although Labour and the Tories remained opposed to ditching the pound, the paper went on to tell us, the economic crisis had revived debate over whether it would ultimately be in Britain's interest to join the eurozone, which this day had acquired its 16th member in Slovakia.
But, by the end of the month, the Greek crisis was fully upon us, with a report that Trichet – then still ECB president - had been forced into repeated assurances that the eurozone was in no danger of falling apart, "despite growing stress in the Greek, Italian, Irish, Spanish and Austrian bond markets".
Amongst other things, this tells you a great deal about the fragility of opinion polls commissioned by partisan groups. This particular example was conducted for Business for New Europe.
It found 56 percent of "business leaders" believed the euro had succeeded since its launch, compared with 14 percent who thought it had failed. A total of 61 percent believed it was a sustainable currency in the long term, while 18 percent disagreed.
I guess you would not get the same result today.
COMMENT THREAD
Sunday, 19 August 2012
While attention in this country was focused on the "delights" of the Limpiks, writes Booker, almost wholly unnoticed here has been the extraordinary drama unfolding in Germany – portending a truly seismic shift in the history of the European Union.
Partly, also, the issue has been left to economics and business writers, who understand little of the politics, and rely far too much on market analysts who know little of the issues and less of the history.
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