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17 May 2012
We reprint below the substance of an article by commentator Simon Jenkins in the print edition of the UK’s Guardian newspaper on 16 May 2012.
THERE IS ONLY ONE WAY TO EXIT THIS NIGHTMARE: GREXIT
The article, published under the headline above, is summed up by the following extract from its concluding paragraph:
“The peoples of Europe are made of crooked timber. They have always fought back against hubristic rulers seeking undue authority over their affairs. While the old Common Market knew its limitations, the euro was a step too far. It required a degree of union that Europe has never tolerated, from the Holy Roman Empire through Napoleon to the Third Reich…”
Simon Jenkins begins his article by predicting “economic nemesis” in Europe.
“The eurozone,” he says, “is a state without a government.”
The article continues along the following lines:
“It has been clear for years that Greece’s political economy cannot manage the cost of euro membership. Debts and subsidies cannot cover its bills any longer. It cannot indefinitely fail to repay money that it should never have borrowed and banks should never have lent….The message from Greece’s democracy this week is to default and take the consequences.
“These days only fools voluntarily leave money in Greek banks. An estimated £28bn in euro notes is said to be hidden in Greek mattresses, awaiting release into the economy via a devalued currency. There will be no recovery until this happens. The bullet must be bitten. Banks must go on holiday and come under state control, while debts are redenominated in drachmas. Lenders, savers and importers will take a mighty haircut….
“Only then can this nightmare begin to end. Only with the decks cleared of debt can Greece, like Iceland and Argentina, before it, start rebuilding its economy at a realistic rate of exchange. One thing only is certain. A year on, Greece will be on the mend and everyone will wonder why exit took so long, and why anyone believed the fools who said it would be an inconceivable calamity.
“….Already the bears are gathering round Spain and Italy, not because their economies are like the Greek one …The austerities required to bring all the eurozone economies into cost equilibrium with Germany are breaking the back of democracy….
“Voters everywhere are punishing governments for repressing demand. What cannot be raised in taxes is borrowed, sending sovereign debt back into the stratosphere. For three years finance ministers have gone cap in hand to Germany, pleading for various forms of bailout.…
“To its besotted acolytes, the euro was to be the final icing on the cake of political union. It was an exquisitely crafted currency that would enable German efficiency to permeate the continent and usher in a dawn of prosperity and contentment. Sceptics said it would merely enable Germany to swamp lesser economies and wipe their exports from the map….
“….But a continent is not a nation. It has diverse loyalties and obligations….
“If Europe’s finance ministers contrived a Greek exit, they would at least have a marginally more plausible euro than now. They could hurl more money at the firewalls round Spanish and Italian debt. They could prop up banks by printing euros….
“This would work only for a while. The sort of fiscal union dreamed of by Germany and its allies in Brussels would soon be rejected by Spanish voters, and eventually by Portuguese, Irish and French ones. Every few years there would be another Greece, and another punishing, debilitating combat between Europe’s rulers and market reality. These are wars that markets always win. Why keep fighting them?”….
Antigone1984: Amen to all that.
You might perhaps care to view some of our earlier posts. For instance:
1. Why? or How? That is the question (3 Jan 2012)
2. Das Vierte Reich/The Fourth Reich (6 Feb 2012)
3. The shoddiest possible goods at the highest possible prices (2 Feb 2012)
4. Where’s the beef? Ontology and tinned meat (31 Jan 2012)
5. What would Gandhi have said? (30 Jan 2012)
Every so often we shall change this sample of previously published posts.