The Corner

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Something This Way Comes


Writing in the Daily Telegraph, Peter Oborne, co-author of the brilliant Guilty Men, is, well, angry:

…[T]he main reason for the depth and longevity of the economic and financial catastrophe striking Europe is that all the policy-makers who are dealing with the crisis were advocates of the euro right from the beginning. In other words, the very people who caused the conflagration in the first place are in charge of putting it out.  This is a disaster. For them, the logical step of abandoning the failed policies of the past decade is unthinkable. It would be an admission of defeat and mark the disruption of their demented vision. This means they are determined to reinforce failure. Far from being driven out of public life, which is what they deserve, the creators of the eurozone crisis remain very much in charge of events.  Let us consider some of the farcically mistaken pronouncements of the past few weeks. The famous Irish Eurocrat – and Goldman Sachs International chairman – Peter Sutherland boasted in The International Herald Tribune that the euro “saved the European economy from fracturing in the economic and financial crisis unleashed by the collapse of Lehman Brothers”. This is delusional…

It is.

I don’t agree with some of what Oborne has to say elsewhere in the piece. So for, example, the monetary union was never a “rational proposition” for those within its borders, other perhaps, than for the very elderly. A crisis was always coming. It was just a question of when.

#more#Oborne’s in favor of Grexit Plus,  coming down on the side of those who argue that the destruction that would accompany this process would “speedily” turn out to be creative. He then writes this:

Certainly, there is likely to be a brief period of chaos, but that is a negligible problem compared to the guarantee of permanent austerity and recession these countries all face inside the eurozone. Within a very short space of time, unemployment will start to fall and as a result wages will rise. Social discontent – today an ever-present danger on the streets of big European cities – will be averted. Above all, systematic economic collapse, which is a stone-cold certainty for many countries so long as they remain inside the eurozone, can be avoided.

There’s a lot in those few sentences to discuss, but the most important is the somewhat blithe assumption of that the “period of chaos”  would be “brief”. Maybe. Maybe not.  Here’s the FT’s Martin Wolf from the other day:

How much pain can the countries under stress endure? Nobody knows. What would happen if a country left the eurozone? Nobody knows. Might even Germany consider exit? Nobody knows. What is the long-run strategy for exit from the crises?

The nature of chaos is its unpredictability. No one can say with much certainty how it would last, or what would be left standing afterwards. And therein is the problem. If it was possible to know for sure that the storm would quickly pass, and that the damage could be safely contained, then the next step would not pose much of a dilemma, at least for those not caught up in the euro-cult.  The problem is that we do not know that, and we cannot know that. We may, however, well find out. Events (and in particular the return of democratic politics) seem to be leading  inexorably to a moment when we will at least get a taste of what that chaos might look like.

And then what?  If the euro is indeed the Titanic, you can be sure that there aren’t enough lifeboats.