To Save Euro, The Crisis Has To Get Worse
Opinion (Anatole Kaletsky, one of the leading commentators on economics, formerly Economics Editor and now Editor-at-large of The Times): “There are two possible solutions for the Greek crisis: The first solution would be for Greece to default on its debts and leave the euro…. The second would be for the EU to accept collective responsibility for roughly half of Athens’ debts….
This second solution is much more likely, because a break-up of the euro is unacceptable to the German and French governments – and a break-up would surely follow a sudden Greek default. If Greece found itself unable to borrow in euros and devalued its citizens’ savings into a new currency, the Irish would fear similar treatment and immediately transfer their savings to German banks, destroying Ireland’s banks and forcing it to exit the euro. That capital flight, in turn, would pose a mortal danger to the membership of Portugal, Spain, Italy, Belgium and even France.
In the end, the creditworthy euro members will have to accept collective responsibility for about 500 billion ($681bn) of Greek, Irish, and Portuguese debts if they want to ensure the single currency’s survival…”
But egoism stands in the way: “The creditor countries do not want to accept an additional euro-federal debt burden, while the debtor countries are even more resistant to the loss of national sovereignty and democratic self-determination…. The implication is that both the creditor and the debtor countries will resist the only possible solution to the euro crisis until they have exhausted every possible alternative.
Ironically, therefore, a continuous threat of crisis is the necessary condition for even temporary financial stability in Europe. As for the “quantum leap” to fiscal federalism that Trichet has rightly identified as the key to the crisis, the logical requirement for this to happen is that the crisis must get even worse.
European leaders hope, by contrast, that the crisis can be resolved gradually, avoiding the need for radical measures, because conditions will improve through the passage of time…. There are, however, two much more powerful ways in which time works against the euro’s survival.” The debtor countries are aware of their strength: Germany, France, and the EU are willing to pay anything, just to appease Greece or Ireland, if they threaten to default.
“If Europe’s politicians genuinely want to save the euro, they must make the quantum leap to a fiscal federation – and do it soon.”
My Comment: These schemes appear very simple if we translate everything that happens into the two forces: the egoistic forces of people, countries, and the world and the altruistic force of the Creator or Nature. They are in conflict, and Nature patiently teaches people the irreversibility of the development process and the necessity to make mutual concessions and come to an agreement, unity, mutual guarantee, and love.
Thus, two camps, the weak and the strong, teach each other concessions, demonstrate how much they need each other—to the point when they realize the necessity to unite fully, above all their differences. Nature will force them to do it!
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