I've watched things unfold, since my last post on the subject a few months ago. Bailouts, haircuts, bonds that guarantee nothing, billions of Euros of debt written off. Bankrupt Greece in deal after deal to avoid default after default, and withdrawal from the Eurozone. Spain, Ireland and Portugal in trouble, Italy and France struggling.
What a joke it really is. It's not about money anymore. It's about Monopoly figures on balance sheets, and it always was, since the Eurozone got into trouble because of diverging performance between economies. The Euro itself is more of a flag than a credible currency, a flag for the dream of a United Europe. The players involved just can't accept that fixed exchange rate systems don't work - and the Euro is the ultimate in fixed exchange rates, because one unit of one nation's money is one unit of another nation's money, 1:1. Take a look at the Gold Standard, Bretton Woods, The Snake - they all lasted only as long as the economic performance of the nations involved remained reasonably in line, a state of affairs that can never last for ever.
So they're now trying ridiculous scheme after ridiculous scheme to try and save the Euro, because they think that to abandon it, or to watch nations fall out of the Eurozone, means that the dream of a United Europe is lost. But in economic terms, that's the whole reason why it could never work long-term in the first place - the Dollar works in the United States of America, and the Pound works in the UK because the constituent States or Counties don't have their own economic sovereignty, their own fluctuating circumstances of cross-border trade.
German Chancellor Angela Merkel (above right) has said in the recent past that Greece should make its debt repayments before paying its doctors and nurses, and its economy should be subject to central control, and that war could result if the Eurozone splits up, and that guaranteed bonds aren't guaranteed anymore, and should be traded in for bonds that are worth less. She seems knowledgeable, but it sometimes sounds like Germany, the largest economy in Europe, is trying to play Fourth Reich, and that it views Greece as a naughty province which never does what it undertakes to do. And Germany is in negative growth itself, isn't it?
So where's it all going to end? The fact that it's been going on for so long tells you that the Eurozone doesn't work, and can never work. It never could work for too long, because of the reasons described above. It's time to view the Eurozone in monetary rather than ideallistic terms, and break it up to stop the effects of gross uncertainty on the rest of the sensible world.
