December 10, 2011

EUROPE: Jim Bennett wasn’t crazy about the Felix Salmon post I linked yesterday, and instead recommends this by Ambrose Evans-Pritchard: Europe’s blithering idiots and their flim-flam treaty.

Given that Merkozy cannot bring themselves to accept that Europe’s debacle stems from the euro itself, from a 30pc currency misalignment between from North and South, and from an over-leveraged €23 trillion banking bubble that German, French, Dutch, Belgian regulators allowed to happen… given that, yes, I suppose they have to find a scapegoat.

They have to whip up a witchhunt against somebody, so why not Anglo-Saxon bankers? Nasty reflexes are at work. German and French politicians in particular should be very careful about inciting populist hatred against a group that makes such easy prey. We have been there before. . . . No doubt these dramatic events will be uncomfortable for Britain, but this will all be swept away by bigger events before long. The Europols have not begun to work out a viable solution to their deformed and unworkable currency union, and perhaps no such solution exists. The system will lurch from crisis to crisis until it blows up in acrimony.

By then, a separate cluster will have emerged (not the 10 “outs” against the 17 “ins”, always a ludicrous concept), but rather a loose Anglo-Nordic-Swiss grouping that may not do so badly on the fringes and may begin to solidify into a seductively comfortable outer tier.

The mere existence of such a constellation might change the calculus of isolation for Spain should it finally tire of Franco-German dictates and depression, or should the Portuguese at last conclude that enough is enough.

Does France, for that matter, really want to be locked into a clammy embrace with an ever stronger Germany? The whole purpose of monetary union for Paris was to tie down a reunited Germany with silken cords. France now finds its own hands tied because of EMU, reduced to a humiliating side-kick.

Jim comments: “Of course, Ambrose is full of English understatement and reticence; I wish he would let go and tell us what he really thinks.”

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