Things have gone full circle. Wolfgang Münchau, a staunch euro supporter now realizes the political hopelessness of it all. In an article in Der Spiegel, Münchau shows he is ready to throw in the towel.
Via Mish-modified Google Translation …
In her final year as prime minister, Margaret Thatcher concluded that a too close interaction with the newly reunited Germany was out of the question.
Thatcher’s Industry Minister Nicholas Ridley said in 1990 in a careless interview in “Spectator” that the planned monetary union was a German conspiracy with the aim of seizing power in Europe. Ridley had reason to resign. Thatcher was deposed shortly thereafter.
I was working as a journalist for the “Times” in London and still remember my outrage at Ridley’s anti-German comments. In retrospect, I must admit, however: It’s been exactly as predicted by Ridley. Germany has become the central power in Europe.
Thatcher and Ridley concluded that from a purely power-political perspective, a junior partner in such an asymmetric monetary union would not be happy. That is how the Italians, Spanish and French feel today.
On Tuesday, George Soros recommended to SPIEGEL ONLINE that either Germany should accept the Euro-bonds or exit from the euro. Soros says that it would be better for Germany to leaving the euro than Spain or Italy. If the Southern states leave the euro, then there will be chaos.
One can certainly make the necessary adjustment within the monetary union, but that requires an almost total centralization of all economic policies. Eurobonds would be only the beginning. This is not a realistic political opportunity. If we reject this path, you should also be honest and say: this is an end to the monetary union.
I welcome the establishment of the anti-euro party “alternative for Germany”. I do not share their position. But the position of AfD is coherent. In contrast, the position of the CDU and FDP, pro-euro but against eurobonds is inherently contradictory.
Margaret Thatcher was also consistent with respect to Europe. She had a sure instinct for both the economic and political power for the future development in the euro zone. For that I pay tribute with respect.
Soros: “If someone leaves the euro, it should be Germany”
Münchau referred to the Spiegel article (translated) Soros: “If someone leaves the euro, it should be Germany”. It’s an interesting read.
I disagree with Münchau and Soros that the euro is worth saving. However, I agree with Münchau and Soros that a breakup of the eurozone is best accomplished by Germany leaving the eurozone than by a piecemeal breakup. I said the same thing long ago.
I appreciate the fact that Münchau now recognizes the political hopelessness of it all. This was apparent long ago, but it is far easier on me. I did not have to switch sides.
Unfortunately, a piecemeal breakup now appears to be destiny. Every head of state in Europe desperately wants to keep this act together, especially chancellor Angela Merkel. Nonetheless, the politics are also such that eurobonds and transfer mechanisms are out of the question.
It’s Just Impossible
- The Bundesbank said there should be no banking union until there is a fiscal union.
- Angela Merkel said that there should be no fiscal union until there is political union.
- François Hollande said that there should be no political union until there is a banking union
- Merkel has explicitly ruled out eurobonds on many occasions.
So here we are.
And as I have stated on many occasions …
Eventually, there will come a time when a populist office-seeker will stand before the voters, hold up a copy of the EU treaty and (correctly) declare all the “bail out” debt foisted on their country to be null and void. That person will be elected.
One more major crisis is about all it will take.
Mike “Mish” Shedlock