Everyone says Germany is the main benefactor in all of this, but they continue to miss the bigger picture: All roads lead to Berlin as the Euro was designed to fail. It is devouring the continent and won’t stop at Greece. In no particular order, after Greece comes Italy, Spain and France. The German-dominated EU might be able to withstand a Greek collapse, but will not any one of the three mentioned or all combined.
Europe’s leaders must face the truth that the single currency now poses fundamental threat to global financial stability
There will be a temptation to gloat over the Greek crisis over the next week and a queue of people waiting to say “I told you so”. Both would be unwise.
In the six years from 2004, Greek output increased in nominal terms by 40 per cent, while government spending rose by 87 per cent and tax revenues rose by a mere 31 per cent.
The European authorities charged with overseeing the single currency should have acted then. Their failure to do so has been partly to blame for today’s crisis.
It does not matter how much money is now thrown at Greece, Thessalonica will not be Düsseldorf any time soon. The cultural gap between the hard-working and profit focused north of Europe could not be more different from this southerly neighbour where masseurs can retire early on a state pension because it is regarded as hard and damaging physical labour.
But the Greek euro-tragedy is part of a wider problem. Last week, on a visit to Macedonia, I saw African and Middle Eastern migrants walking through the country to try to get to an EU state. The fact that they hadn’t even bothered to stop in Greece spoke volumes about how it is viewed internationally.
We have now reached the point where the euro does not have a problem – the euro is the problem. De-risking it should be a priority for European leaders, as it now poses a chronic risk to global financial stability. Either the outliers need to leave or the countries inside the eurozone needs to move down the pathway to full political, economic and monetary union.
The first option is unpopular because to see the riskier southern European economies leave would be a huge setback to those who hold the concept of ever closer union as an almost religious concept.
For the other outlier, Germany, to leave (a logical if politically unrealistic option) would deprive it of the use of a currency hugely undervalued for its own economic strength.
It is one of the unspoken truths of the euro project that while German politicians and tax payers complain about the cost of maintaining some of their weaker economic partners, it is Germany itself, which has benefited enormously from the value of the euro in terms of its international trade.
Full article: The Euro Does Not Have A Problem… It Is The Problem (The Telegraph)