Saturday, 18 August 2012

Interesting ...

An interview with the Finnish Finance Minister in the Daily Telegraph has been reported in the German papers. As I live close to Frankfurt-am-Main, the centre of the €urozone Central Bank, I suppose this is natural. Especially when the Finnish Minister suggests that the €urozone is about to break-up and his government already has plans for what to do when it does.

The immediate response from Brussells is, as you would expect, that they have NO plans and DO NOT intend to make any. Interesting, because, with all the politicians on their summer vacations, the "€uro Crisis" hasn't featured much in the news here lately. So I guess this statement must play into a wider agenda. Perhaps it is intended to wake Brussells up and kick them back to work. A cynic might retort to that - "That would be a first then!" As they say in German; Das geht nicht. Bureaucrats and real work are complete strangers.

Seriously though, if, as so many seem now to be predicting, at least in the English language sphere, the €uro does go under, there will be a need to reinvent currencies. Some will be less difficult, I suspect, than others, but it will be a painful process. The pain, however, is most likely to be felt by the men and women in the street - not by those who have engineered it.

Add to that, who will want to trade in Drachmas, Lira or Pesos if they are revived? Some of them may be forced into a straight 'barter' system - which, rumour has it, is what the already destitute are forced to do now in some places.

Whichever way, and I am a supporter of the idea of the single currency, those that have recklessly brought it to this point, and those that gloat at the prospect of destroying it will not be the ones paying the price. That annoys me.


  1. Slim Jim spouts:

    I'm afraid supporters as well as opponents will pay the price if the euro fails, but it's better to have the pain now rather than postponing it time and again. As for returning to old currencies - no problem. Simply stamp existing banknotes with the appropriate authority and that would suffice until the new notes were printed. I believe that's what happened in Slovakia when they changed to the euro, so it can work in reverse.

    The problem is, countries like Greece need to devalue, default and decouple to make their economies competitive again. The Politbeuro wouldn't like that as others would want to follow suit! It's how the markets react that's important. There can be no monetary union without political union, and that, Dear Monk, is never going to happen! One of your recent post mentioned the power of ideology over reality and common sense. This is such a moment. You're annoyed? No, you're confused!

  2. There is something afoot says Didymus. You go years in England never hearing anything about Finland but all of a sudden there are leaks and comments and detailed breakdowns of the Fin political system cropping up - all with referance to the Euro and the Markka. Finland is one of the few countries that could survive the break up of the Euro quite easily - do they know something we dont?

  3. Jim, I think we can be very sure that the financial speculators and the bankers won't lose, nor will their buddies in the political classes. The pain will, as ever, be borne by the rest of us.

    Didymus, there does seems to be something afoot. I suspect Jim is right in the sense that several countries are heading for a 'default' on their debts and that may well trigger the dominoes tumbling. Hopefully it will return the EU to what it was supposed to be - a European Free Trade Area. But I suspect it will not go quietly or without some drama.