The Daily Telegraph’s Ambrose Evans Pritchard argues that the risk of an immediate default crisis in the euro zone has passed (for now), but then returns to the underlying dysfunction that festers on within the currency union, our old friend “one size doesn’t fit all”:
What Europe faces is a north-south incompatibility crisis, the result of ramming together misaligned economies and countries into a single currency. Whether you think this matters depends on whether you think the democracies of southern Europe will tolerate slow grinding depression – with no light at the end of the tunnel – for year after year. The denouement is hard to predict in such situations. Political upheavals are famously non-linear. But the situation in Spain is remarkable, with the added nitroglycerine of a ruling party determined to exploit the crisis to take power back from the regions, and Catalonia determined to resist with all means at its disposal.
And we should not forget the truly corrosive effect of unemployment, particularly youth unemployment, on the scale that the vampire currency has now created. If you deprive too many people, including young, smart and ambitious people, of the opportunity to get ahead within the system, then there is a decent chance that they will push back hard against that system. So far savings, welfare narcosis, the safety valve of emigration, and the comfortable habits of the good times have kept such sentiments in check, but for how long?
Mr. Evans-Pritchard continues:
Mr Barroso [the EU Commission’s top official] may be right that the euro will not implode in 2013. But what matters henceforth is whether the victim nations wish to stay in a project that is causing so much damage, or indeed whether is any moral purpose in holding the euro together at this stage. The march towards fiscal union (overtly, or by ECB stealth) strips elected parliaments of the final control over tax and spending. It thus eviscerates democracy. The Project breaks the back of historic nation states that are the only real defence of liberal representative government. So one has to ask, what is the euro for? Why is it self-evidently a positive public good for the peoples of Europe?
Why sacrifice the lifeblood of parliaments for an economic experiment that is not even offering a `Chinese’ trade-off of prosperity in exchange for abridged liberties. Why sacrifice democracy for a Barroso Model that has generated a youth jobless rate of 56.5pc in Spain?