Wednesday, March 30, 2011

Piling on...

...from the previous post. An excerpt from Matthew Lynn's new book about the EU and the Euro currency. One of the reasons I started this blog was to contend that the Euro is doomed.

By any reasonable measure, the single currency has been a failure. It hasn't made the economies of Europe converge: If anything, they have moved further apart over the past decade. It hasn't promoted growth, except of the most unsustainable and unbalanced kind: crazy credit booms in Spain and Ireland, reckless public spending in Greece and massive, pointless trade surpluses in Germany.

Nor has it shielded its members from financial instability: In fact, the euro has created instability, visiting a wholly self-made crisis on the European continent. It is a cause of instability, not a cure for it.

Looking forward, there are years of terrible austerity for the high-deficit countries, accompanied by big cuts in living standards and rates of unemployment that will make it virtually impossible for an entire generation of Greeks, Irish or Spanish to build careers for themselves.

In Germany, the Netherlands and France, there will be simmering resentments over the bailouts. Years of "Bild" front pages shrieking about lazy Greeks living well on German taxes will take an inevitable toll on what was until now the most pro- European of countries. Does that strengthen the EU? It doesn't sound like it.

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