Well, that\’s the end of the euro then.

Willy Hutton says it\’s been saved. Must be dying then.

Hutton is, as you will remember, the man who insistied that we should have a Gordon Mac to shore up the housing market: mere weeks before Freddie Mac and Fannie Mae went bust.

The man\’s an infallible lodestone pointing to what not to do.

A curious thing happened last week. European governments rose to the occasion. The euro, confidently predicted by almost every British analyst and commentator to be on the point of collapse, survived.

Expect collapse on Tuesday afternoon then.

What a floating exchange rate regime means in practice, as Europe learned in the 1970s, 1980s and 1990s, is that every currency, including sterling, benchmarks itself against Germany. No interest rate can be lower than Germany\’s and any country tempted to have a fiscal policy that is less conservative than Germany\’s gets hammered by the financial markets. This is not sovereignty – this is being Germany\’s satellite.

And having the same currency and the same interest rate as Germany reduces this, does it?

Jeebus, man\’s a fool.

With the measures put in place, the EU will have made its single currency work – a more democratic, fairer and ultimately workable currency regime for this continent than floating exchange rates shadowing German fiscal and monetary policy.

Where does he get this shit from? The Germans telling the Greeks how much they can spend is \”more democratic\”?

Enterprising governments will have created a unique institutional architecture to support the euro. State power will have been exercised to shape Europe\’s financial markets and thus its capitalism – neither market fundamentalism nor statism, but a blend of the two. It is this blend that is the secret of successful capitalism. The new architecture will trigger the restructuring of the innovation and investment systems of the weaker southern euro members. Gradually, their growth rates will accelerate and unemployment fall while Germany continues its second economic miracle, so pulling the rest of the eurozone up in its wake. The 2010s are likely to end with Europe in remarkably good shape.

Willy, the euro is already supposed to have done that. Just like shadowing the Deutschmark was supposed to do that for the UK under Nigel Lawson. And we do recall how that worked out do we?

Good Lord Almighty, the man really is saying that a currency which has brought on several national bankruptcies is something to admire, even to join.

9 thoughts on “Well, that\’s the end of the euro then.”

  1. So it’s a done deal and we can all relax.
    Merkel has gone on holiday without telling anyone where she left the cheque book. Noone knows who pays what, when and how. Is the haircut on the banks voluntary or not? Does it constitute a default, a restricted default or does it not trigger CDS payouts?
    This done deal is going to get undone faster than DSK’s zipper.

  2. As the deal does nothing whatsovever to improve the sustainability of PIIGS debt – not just Greece’s – it has a vanishingly small chance of succeeding. The markets will simply raise yields on PIIGS debt to further highs, forcing yet more infusions of taxpayer money until eventually someone says “NO MORE”. Whether this someone is a northern country that has had enough of bailing out southern ones, or a southern country that has had enough of deep recession and grinding poverty, remains to be seen. But he evidently knows nothing about this – or if he does know, he doesn’t care. It’s a disgraceful piece of writing.

  3. So it will become a third world country just like N.Korea or Cuba. Interesting theory of democracy he has though!

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