Friday, July 16, 2010

The United States of Euro, or, A Homily On Being Careful What You Ask For.

The long running soap opera of European unification seems to have come a cropper and is presently on the reefs because of guessed

Let me explain. One of the pillars of European unification-not to mention a way to smack the yanquis and their pretentious ugly dollar that had become the world's default currency-was a common currency movement that would prove that there was strength in numbers and beauty in currency.

The Germans were very much in the forefront of this because it was said that financial policy would keep otherwise spendy folks in line, and financial policy would be written by Deutsche Bank and its allies, all nicely tied up with legislation from a compliant European parliament.

Well. This is not the first time that the Germans entertained imperial ambition in Europe. In fact, it occurred several times in the last 140 years. Think I'm wrong?

Signal-that was the magazine of the Wehrmacht kinda like Yank for the GIs, and there was an English edition published mostly for the edification of folks in the Channel Islands and the 'useful idiots' in Ireland who were pretty quick to take a kick at John Bull's shins. All the while their meat and drink was being carried in British bottoms and protected by British sailors, many of whom never came back from the wild and desolate Atlantic at the hands of Hitler's U-boat men.

But nevermind-I'll save that rant for some future occasion where Irish hubris is demonstrated and an apology is called for, and I will of course at that time except those brave Irishmen who took up the King's and democracy's cause because it was the moral and honorable thing. He whom the Gods would destroy, they first make mad and all that.

I've got a nice coffee table book, five years of Signal, I'll drag it out some time for you. I'll bet the editorial staff at Signal was making with the inconspicuous like when things started turning sour in the winter of 1941 and thereafter too.

The recurring theme in those dusty volumes of Signal is "One Europe-Led by Germany". Starting to sound familiar? I thought so.

Well-before the recession of 2007 alles was in ordnung with the Euro project, values going up daily against the dollar, and the self congratulatory tone was evident for folks like me who used to hang around sites like until they got expunged with extreme prejudice and cast into outer darkness for having the audacity to point out the errors in this sort of thinking.

So what's happened? Does the phrase 'Potemkin Village' come to mind?

This morning was the first time I heard the term "PIGS countries"-Portugal, Italy, Greece and Spain, although we could add Ireland because they've gotten a taste of Euromalaise themselves and are on short commons as we speak.

It seems that underpinning all this growth in government employment, fat pensions for civil servants, public works projects like everything that's come out of Airbus in the last 40 years, social spending, free medicine, housing boom, all this driving the value of the Euro ever higher-all of it was misread in places like Dusseldorf and Berlin as prosperity under the wise tutelage of folks in Germany who of course know how to lead a project like none other.

We have a saying here: If it ain't broke don't fix it. Of course the error is in thinking it ain't broke yet so nothing needed doing.

It was because of the same stuff that went on here in the US-borrowing on every level from consumers to the governments without a clue as to how repayment was going to be made, in the firm belief that property values rising a steady 20 per cent per annum every year would continue indefinitely, world without end, amen.

Just roll that hedge to arrive contract forward, for my farmer friends with long memories.

Not to mention the dodgy derivatives, credit default swaps, mortgage backed securities that were portrayed as an American invention which of course European institutions would never do. Well. They did, and it was just as bad as anything Goldman Sachs or AIG did.

It now seems that only the Canadians were thinking straight-it's to their credit as solid conservative and modest people. Of course there's that whole Quebec thing but we all have our problems.

Safe banking wasn't one of theirs and it's like safe sex. Not adventurous at all but intelligent if you're all about survival.

It also now appears that the Germans are starting to think that they'd like to step away from what they created, when it isn't paying regular profits and won't shut up and go away.

All of which is a homily. They wanted to run Europe, now they are, and it's nowhere near as much fun when the new relatives start with the money problems because they blew their roll at the casinos on Wall Street. And, they can't call on the Wehrmacht or the Kriegsmarine to straighten things out as they did in the last century-for which the rest of us can be grateful.


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