We agree, however, that the single currency needs to survive and succeed

That\’s the bit that Ed Balls and the Slime Lord don\’t explain.

Why does the single currency need to survive?

33 thoughts on “Why?”

  1. To save face.

    The European Dream must survive regardless of how irrecoverable it is and how much it will cost.

  2. Why should Britain be at the centre of the debate on the euro? We have no rights in the matter, and for every h’ap’orth of advice we give we’ll be charged billions.
    And Balls is missing an opportunity to say nothing now and “I told you so” later.

  3. And don’t forget that the Lord of Darkness has an enormous EU pension riding on a commitment to promote all things EU.

  4. Equally, look at the other classic ConLabLib politicians who have gone from UK political failure to gravy swilling excess on the EU Commissioner’s junket.

    The road that Mandleson, Patton and the Kinnocks have gone down to line their pockets with gold has to be kept open, otherwise where will Ed Millipede and Ed Balls bugger off to when they finally get shown the door.

    “Treason doth never prosper: what’s the reason?
    Why, if it prosper, none dare call it treason.”

    Sir John Harington, Epigrams, Book iv, Epistle 5.

  5. Because failure would be disastrous (much worse than if the euro had never been created in the first place).

    Imagine the sort of capital flight that would occur if Italy, say, were to announce that it intends to leave the Euro next month in favour of a New Lire.

    Tim adds: Well, the one thing you really don’t do is pre-announce it. you annouce it at 5 pm on the friday of a bank holiday weekend. And hope like hell that you’re done by 9 am Tuesday.

    Krugman announces on his blog that Greek exit at least is coming…..

  6. Tim: you think it could be kept secret? Really? (And if it could, you wouldn’t be raging at the unfairness of the secrecy?)

    Rob: Conservatives were right? Like Robert Mundell, for example. (You’ll find the footnote on page 3 amusing.)

  7. @blokeinfrance
    I guess if the UK doesn’t support the euro, the EU will take measures so that London can’t be the financial centre of Europe anymore.

    There is a paper where a certain bloke called M. Friedman debates Mundell on this issue. You should be able to find it with Google.

  8. It’s because, as we all know, the EU is one of the foundation stones of the so-far very successful project to establish non-democratic, oligarchical rule by the New Class (inc. Balls and Mandelson) over the whole world. The Euro collapsing would be a major backward step for that project.

  9. “Tim adds: Well, the one thing you really don’t do is pre-announce it. you annouce it at 5 pm on the friday of a bank holiday weekend. And hope like hell that you’re done by 9 am Tuesday.

    But if Greece did this, wouldn’t there be massive capital flight in Portugal the following week?
    (Not the Greeks’ problem of course).

    Tim adds: Yup….couple of pieces around the net which make this point. Really sensible would be to pull everyone out on the same weekend…..but that won’t hapen.

  10. Mario: indeed. I don’t say that conservatives were all in favour of the Euro: they were not. I say that it wasn’t a straight disagreement between left and right – it was the centre that was most in favour, as it still is.

  11. There has already been considerable capital flight from the euro-periphery. But maybe not as much as simple economic calculus would predict.

    Leaving aside issues as the difficulty of opening a German bank account (you need a German address) or the fact that many of the well-informed will be net debtors… Could the shortfall in capital flight be explained by simple patriotism?

    Rather a good sign, if true. (if in italics)

  12. It seems to me that avoiding painful failure does more harm than good. We avoided the bank failures that should have happened in 2007/8, because we were so terrified of the consequences if we allowed them to fail: now we have highly-indebted sovereigns propping up zombie banks at the expense of their populations. The EU leadership are doing everything in their power to avoid ending this failed experiment, because the world is terrified of the consequences: so we will have even more indebted sovereigns propping up a zombie currency at the expense of their populations. And I don’t mean just Eurozone sovereigns, either. The involvement of the IMF means that sovereigns around the world will spend money they can’t afford to keep alive a currency that really needs a silver bullet and a stake through its heart.

    The euro will end eventually: it doesn’t work in its current half-baked form and there is zero political will for it to be transformed into a proper currency union like what we have in the UK. It’s just a question of whether you prefer your pain now or later. Kind of the opposite of “deferred gratification”, except that the pain won’t be any better for being delayed. The sooner this awful monetary disunion falls apart the better.

  13. Why does the single currency need to survive?

    Because for my honourable Lord Mandelson, if he in any way criticises it he could forfeit his whopping pension as it comes with a condition that he must uphold the interests of the EU or else. Presumably Ed Bollocks has his eye on a commissionership when his missus dethrones the gurning alien and takes over the Labour Party

  14. @Frances – best analogy I’ve heard is that the crisis is like a tumour; you can cut it out and take the pain now, or you can keep giving the patient shots of the morphine of QE and face a bigger problem later

  15. I scuttled over to the HoL Register of Interests to see what the Prince of Darkness had registered. I was disappointed to learn that:

    Such conditions attaching to pensions from European Union institutions do not normally require the pension to be registered or declared in proceedings in the House.

  16. Incidentally, according to the register, Mandelson appears not to own a controlling interest in his own company – nor shares worth £50k.

    Mandelson has form on this sort of financial hocus-pocus though. Remember when he was thrown out of the cabinet the first time for fiddling his mortgage?

    I would expect The Prince of Darkness to have the ownership in a trust which he controls (either directly or indirectly) as Tony Bliar has done or through nominees.

    Remember The Prince of Darkness has friends in low places (bwaa ha harr!).

  17. FA,FC: I don’t think much of the analogy; the eurozone crisis is more like metastatic cancer than a single benign tumour.

    I agree that the Euro is not sustainable in anything like its current form. But I am not at all sanguine about the prospects for any sort of orderly dissolution.

  18. I would expect The Prince of Darkness to have the ownership in a trust which he controls (either directly or indirectly) as Tony Bliar has done or through nominees.

    But it would have to be a blind trust to escape the Registration requirements. I fail to see how you can have your shares in a blind trust when you are a director (which he has registered) and the sole purpose of the company is your media and writing fees / earnings?

  19. @Frances_Coppola – Brilliant as always. The WGCE and his numerous acolytes in the Hard Left blogosphere rabbit on about how disastrous it would have been if the banks has been allowed to go to the wall in 2008: ‘People unable to get cash out of cash points, widespread panic, possible rioting, and so on ad infinitum’

    As you say, the result is we have ‘zombie banks’ being propped up with a stream of imaginary money. I’d agree that the consequence of a Euro break-up are likely to be very difficult but you cannot buck economic reality forever. The Euro was a fundamentally flawed concept whose sole real beneficiaries were the EU nomenklatura! Not grasping the nettle now will merely postpone the day of reckoning….

  20. Surreptitious Evil,
    The Lords’ Members’ Interests Committee (including a former Lord Chief Justice) did rule that the conditional EU pensions were an interest which noble Lords ought to declare before speaking on EU matters. However, the Privileges Committee decided otherwise. I am not sure of the grounds – either that the EU was an accepted part of our constitution or perhaps that noble lords would never be swayed in their views by pecuniary considerations. The noble lord who informed me of this was incandescent with rage!
    An early enthusiast for the European Economic Community showed greater wisdom than today’s eurocrats. “Currency is always secondary to economic policy. When the economy is unsound there can be no stable currency. In a sound European economy with a rational division of labour between the economies of European countries, the currency question will solve itself…..” Reichsminister Walther Funk, President of the Reichsbank and Minister for Post War Planning, July 25 1940. People were getting excited about the idea of a single currency then but the Nazis were more realistic and believed that economies must truly “converge” before it could happen. Incidentally, Funk coined the title “European Economic Community” at that time.

  21. Paul B

    Had the operation been done when it SHOULD have been, the cancer might not have metastasized. We are already well down the “if we put it off now it will be much worse later on” road.

  22. I thought the decision in 2008 to let Lehmans go bust and bail out the others was about the best available (obviously I wouldn’t have started from there). I don’t see the connexion between the management of the 2008 banking crisis and the current Eurozone sovereign debt crisis. If I understand Frances correctly, the Zombie banks she writes of are not banks which benefited significantly from the 2008 bailout.

  23. An Austrian minister has just said that if Greece leaves the euro it should leave the EU as well. (It was in German, on the radio, so no link.)
    Could it happen to us too?

  24. BiF @28

    It’s because of the way the idiotic Euro was set up. Technically there is no mechanism to leave the Euro, but there is to leave the EU. So in some models of Greek default the only way they can leave the Euro is to leave the EU. In practice, I suspect that they will unilaterally leave the Euro and be in default of some of their obligations whil remaining in the EU – probably with the assumption that they will strive to meet the joining the criteria.

    In reality what worries me is that the Eurodorks keep saying stuff like “it wont matter, we have firewalls”. Partially this is for Greek consumption – for negotiation. The only problem is that Syriza will be going for insane amounts of bailout money. So we will get to see how the Eurodorks firewalls work. Since they are dorks, the odds are they wont work. This as they say is likely to be suboptimal.

  25. PaulB

    What Europe did in the financial crisis and what it is doing now are pretty much the same thing – avoiding the issue. It didn’t have a Lehman. It bailed out all its banks and now it has zombies. And it’s dong the same with the euro.

  26. Well yes, certainly the Irish should have let their banks go, and the Germans could have allowed a couple of the Landesbanks to fail (but they can afford to indulge themselves), and if one wanted to see blood RBS could have been allowed to fail.

    “Zombie Banks” is used to mean all sorts of things, but from the context I guess you mean assorted insolvent banks in PIGS. In which case, I don’t see the connexion. Are you saying that if RBS had been taken out and shot the Caixas would have learnt to restrain themselves?

  27. Paul B

    I’d have let the lot of them fail. Including the insolvent banks in the PIIGS. They all should have been cremated long ago. Because they weren’t, we now have the living dead. And Europe is doing exactly the same thing with the euro – except that the zombies won’t be the currency itself, they will be the sovereigns that have died because of it.

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