‘Tempted, Angela?’

by Andrew Stuttaford

The Economist’s editorialists wonder (very hypothetically) whether Angela Merkel is mulling a plan B:

But for this very practical woman there is also a practical reason to start contingency planning for a break-up: it is looking ever more likely. Greece is buckling. Much of southern Europe is also in pain, while the northern creditor countries are becoming ever less forgiving: in a recent poll a narrow majority of Germans favoured bringing back the Deutschmark. A chaotic disintegration would be a calamity. Even as Mrs Merkel struggles to find a solution, her aides are surely also sensibly drawing up a plan to prepare for the worst.

Fair enough. The editorial sketches out the costs of some of the different types of possible break-ups (although not the northern euro or a German departure alone) and then goes into more detail in a full article here.

When it comes to Brussels, the Economist is at least a semi-domesticated creature, and so the potential costs and risks it cites are duly alarming. And to be fair, they could be. The fact is that we have very little idea of how a break-up could spin out. Accepting that, and the danger posed by the unknown unknowns, can be a perfectly respectable reason for defending the status quo — the risks are potentially so appalling that running them cannot even be contemplated — but it’s important to recognize the hazy intellectual basis on which this argument rests.

Another point. The Economist’s method of pricing its favored solution — a euro-zone-wide deposit-guarantee scheme (and mutualizing a “slug” of debt) takes little account of the longer-term costs of preserving a fundamentally dysfunctional currency union that could hold back the euro-zone’s economic progress for decades to come. Even to believe that the direct costs could be capped in the way that the Economist suggests is, shall we say, to be very trusting.

And then there is the political cost. Just how much value does the Economist put on the preservation of what’s left of genuine democracy within the EU? Not a lot, it seems.

Check this:

The euro could have been saved a long time ago, had the politicians agreed… on how much sovereignty to surrender.

Note how this is to be left up to the “politicians” to decide. The idiot class that must take so much of the blame for this catastrophe still, apparently, know best. The mismatch between the aspirations of that political class and the voters they purport to represent is, when it comes to the European “project”, hardly a secret. The Economist wants to make it worse.

And check this:

Politics is turning rancid as the south succumbs to austerity fatigue and the north to rescue fatigue. Populism only makes a grand bargain more elusive.

Ah yes, “populism.” In this context that would mean actually paying some attention to the opinions of voters on matters touching on the very essence of their nations’ sovereignty. Can’t have that.

Not the Economist’s finest hour.

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