- - Wednesday, July 8, 2015


When the euro was first proposed and for some time after it became the currency, certain economists had pertinent questions (which some of the hosanna shouters thought impertinent): Could a common currency be possible for a group of countries which insisted on keeping their own individual economic, monetary and fiscal policies intact?

When an answer came back, which was not often, it came back in a babble of voices. From one place the answer conceded the question was a legitimate one, but not to worry, in some mysterious way this fundamental problem would be solved. How and by whom was never made clear. From the other end of the spectrum, where answers often verge on the silly, came the suggestion that the real answer was abolition of individual nation states for a federal if not a unitary political union, for which the common currency would be a handmaiden. Currency a handmaiden? More like a tart.

Between these extremes were spoken and unspoken alternatives, ranging from a vow that progress toward a commanding central bank, and one policy, would emerge from the various European institutions — the bureaucratic European Commission, the nominal multilateral executive; the Council of Ministers and the relatively powerless European Parliament. In addition, this Christmas tree was decorated with an additional four high-sounding named institutions, such as the European Court.

Britain, of course, in the usual pragmatic way of the Anglo-Saxon constitutional process, said thanks but no thanks. Britain could not and would not abandon sterling, which if no longer a challenge to the dollar as a world reserve currency, nevertheless contributes to the continuing profitable dominance and profitability of London as a leading world currency exchange.

Of course, in what was easily predictable, each country went its own way. There was continual conflict between Paris and Berlin, the two central pillars of the new money, with France always flirting with “dirigisme” — central planning — and Germany pretending, at least, to be a full-fledged market economy.

But while the big boys — “the big mules” as they might have been called earlier in America — talked about the major issues interminably, and then talked some more, the cat was away and the mice did play, as mice will do. It was easy for Athens, and even the governments in Lisbon, Madrid and Rome, to use their unlimited draw on the common currency to finance lifestyles to which they wanted to become accustomed, but for which they were either incapable or unwilling to work hard enough to achieve on their own.

Much of the accumulating mess in Greece is historical. It’s easy, and with some justification, to blame it on the hated heritage of the Turks’ Ottoman Empire, but now that’s a hundred years behind us. No one now speaks above the noise of the intense and infinitely complicated negotiations to trim Greek excess without killing its economy altogether. The shrewd, amoral left-wing government in Athens pulls the cat’s tail and dares it destroy a voluntary association of free nations. And the beat goes on.

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