Soothed by the flow of nominally cheap loans from the European Central Bank to hundreds of European banks, the crisis in the Eurozone has slipped from the headlines in recent weeks, but the gently ominous pick-up in Italian and Spanish bond yields is a reminder that the stresses and strains tearing at the single currency are there – one size still does not fit all.
That anyone thought that it could is a mark of how much the Eurozone is a political project, designed to rearrange economic reality by bureaucratic fiat.
And as a reminder of just how political this project is, we have these comments on Monday by Angela Merkel:
While Greece faces a “long and arduous road”, Merkel said European leaders must keep Athens within the euro zone or risk a domino effect that would lead to speculation about more countries abandoning the currency.
The risk of a domino effect is real enough (although it may well be worth running), but note this:
“This is not only a monetary decision it is a political one. It would be catastrophic if we were to say to one of those who have decided to be with us ‘we no longer want you’,” Merkel told BBC television’s Newsnight programme. “The euro area would be incredibly weakened.”
“It would be a huge political mistake to allow Greece to leave,” she added.
The German chancellor’s comment that a Greek exit from the Eurozone would also be politically catastrophic makes little sense unless one understands the context within which she is speaking. It is not the politics of Greece (or even Germany) that she is talking about, but the politics of the single currency, which continue to trump considerations of national interest, national prosperity, and commonsense.
And if that means that German taxpayers are fleeced, so be it. And if that means Greece is reduced to an economic wasteland, so be it.
It’s the dream that counts, the impossible dream. And if you think that sounds like fanaticism, you’d be right.