My previous post talked about the Euro crisis from the point of mankind’s inability to say “Stop – hold on a minute – I have made a mistake” and perform a U-turn on policy.
- What crazy person thought that a single currency shared between multiple completely different countries was ever going to work?
Again I refer to one of the terrific BBC Radio 4 ‘A Point of View’ talks that I heard a while ago. You can read the whole transcript here. In it, David Cannadine carefully explains the history of monetary unions (there have been a surprisingly large number of shared currencies in the past), all of which have ended in failure. As an example, he states that:
“…the most immediate predecessor to the EMU was the 19th Century Latin Monetary Union, which attempted to unify several European currencies at a time when most circulating coins were still made of gold or silver.. …It came into being in August 1866 … So irresponsible and unacceptable did Greece’s behaviour become that it was formally expelled from the Latin Monetary Union in 1908… …the result was that the LMU effectively came to an end in 1914, although it lingered on as a legal entity until its formal dissolution in 1927“.
One of the few joys that Roger has in his (frankly tedious) job is that he has the pleasure of talking to people from all over Europe (and indeed the world) every day. He delights in the differences of culture, attitude, accent, lifestyle and humour of his colleagues and customers from all over the world. Europe is home to probably the most diverse set of cultures (compared to its geographical size) in the world. We approach things differently, be it fashion, food, work and (crucially) our economies/monetary systems. One system that works for Germany is never going to work for Greece (and vice versa). They are not too far apart in distance, but a world apart in how they approach budgeting/spending/taxes etc.
- Roger has long said that the only way that a fixed exchange rate system could possibly work is if it only contained countries with extremely similar attitudes/economies.
Perhaps a common currency would have worked if only Germany and France had joined. More likely it could have worked if 2 or 3 Scandinavian countries were its only members. The three Benelux members have a shared identity, so perhaps those three could have worked together. However it is impossible that Europe could ever be thought of as uniform and unified enough to have supported a single Euro amongst all those nations.
Even the most pro-European must admit now that the Euro is a ticking time bomb – it is not a matter of if it fails, but simply a matter of when.