To Save The Euro We Must Destroy Germany
BI: Yesterday German Chancellor Angela Merkel came flat out and said, "To save the Euro we must Destroy Germany".
Well not exactly, but she may as well have because that is the implication. This is what she did say: Germany Is Ready to Cede Some Sovereignty to Save the Euro
Chancellor Angela Merkel said that Germany is ready to cede some sovereignty to strengthen the euro area and restore confidence in the common currency.
European Union treaty changes to strengthen EU institutions and patrol tighter budget rules are needed “to make the euro zone more crisis-proof,” Merkel told reporters in Berlin today at a joint briefing with Irish Prime Minister Enda Kenny.
“Germany sees the need in this context to show the markets and the world public that the euro will remain together, that the euro must be defended, but also that we are prepared to give up a little bit of national sovereignty,” Merkel said. Germany wants a strong EU and a euro “of 17 member states that is just as strong and inspires confidence on international markets.”
Not Merkel's Decision
For starters Merkel is saying what she wants. It is debatable if that is what Germany wants at all. I rather doubt it.
Moreover, even if it is what Germany wants, it is not Merkel's decision. Such decisions, as the German supreme court has ruled are up to voters of Germany, not politicians with an axe to grind about what they want.
If German voters want to cede power and form a European nanny state, then so be it. But it will be the end of Germany and the end of Europe as well should they do so.
Desperate Attempt to Save Something Not Worth Saving
As the crisis lingers the cries for more intervention get louder and louder, even though the massive intervention to date has only made matters worse.
Ambrose Evans-Pritchard highlights the cries for intervention in Latin showdown with Germany over ECB
The EU's €440bn EFSF bail-out fund was supposed to take over on the rescue task, relieving the central bank. It has been a disastrous flop, unable to raise money itself at a viable cost after toying with leverage plans that greatly concentrate risk for creditor states. The net effect has been to accelerate contagion to the core.
Germany's constitutional court has ruled that "open-ended" and "automatic" liablities violate the country's Basic Law. So only the Germans can save monetary union, yet the Germans cannot legally do so. Europe's crisis has reached an impasse, the result of the original design flaws of EMU.
Even so, a growing chorus of economists within Germany itself is calling for a strategic change. Wurzburg professor Peter Bofinger wants the ECB to cap Italian and Spanish yields.
"We are in an emergency situation; this isn't plastic surgery. If worse comes to worst, the ECB has to act before the financial system falls. And if it acts, it should act properly and set an upper limit for sovereign yields. It's naive to believe that Italy can solve its problems on its own. Structural reforms can't be implemented overnight.
"Dennis Snower, head of the Kiel Institute, said the ECB must act to stem the crisis, even if this means straying into fiscal policy. Thomas Mayer from Deutsche Bank said Italy's new government will fail unless the ECB buys time by holding down yields, perhaps as low as 5pc.
Euro Experiment is Over
Pritchard concludes with a couple of paragraphs that I whole-heartedly endorse...
David Heathcoat-Amory, Britain's former Europe minister, said Berlin will do whatever it takes to try to save EMU.
"The Germans will pay up, accept eurobonds, and mobilise enormous firepower. But this won't save monetary union in the end because it is not a debt crisis. It is a currency crisis. The weaker states are uncompetitive and you cannot force them to deflate their way back to competitiveness by cutting wages 30pc. The EU elites won't admit it, but the euro experiment is over," he said.
Merkel is willing to destroy Germany (and Europe) to save something that is doomed anyway.
Top Orwellian Comments Of All Times
An American major after the destruction of the Vietnamese Village Ben Tre: "It became necessary to destroy the village in order to save it."
Vice President Joe Biden: "We Have to Go Spend Money to Keep From Going Bankrupt."
President George W. Bush: "I've abandoned free-market principles to save the free-market system."
We can safely add "To Save the Euro we Must Cede Sovereignty" to that list.