Even the doughty Economist is adopting the brace position for the demise of the Euro. The markets have been falling for ten days in a row. And yes, I have poked my snout in there and made some purchases – the tragedy of a market fall is you can’t call the bottom so you have to take a few hits between the eyes. I’d say it’s early days yet.
It’s possibly within Angela Merkel’s capability to save the Euro, and yet she chooses not to, at this stage. I can see her point – she could doom the German nation to become the milch cow for the rest of the Eurozone. There is much harrumphing about modifying the European treaties to stop profligate countries overspending, but you have to ask yourself, how the heck does that work? There is no answer to the Josef Stalin question, where are their divisions? How exactly would you pressurise Greece to stop the early retirement and tax dodging? If you fine them, then the problem gets worse. You have to park tanks on the lawn. After all, in a working transferunion like the United States, they still haven’t found a way to stop California voting to stop taxing but carry on spending. In a democracy there are usually more votes for spending than for saving 🙂
I believe the reason that the federal government can’t park tanks on Arnold Schwarzenegger’s lawn is because the US military isn’t allowed to act on behalf of the Federal government against US citizens on US soil, but it’s probably the only way to stop the economic transfer. In the end the only way to stop one group of people hell-bent on behaving in a way you don’t like is to apply the threat of overwhelming force. Understandably, there is trepidation in Germany about sleepwalking into that kind of situation in Europe.
So it seems that Angela Merkel is drawn into the scenario painted in the movie Forbidden Planet, where in trying to avoid a deep-rooted fear, the energy lends power to unconscious forces that start to destroy something else she holds dear, which is the Euro.