“The Euro Is Like a Knife in the Hands of a Child”
While France is preoccupied with the legislative elections next weekend, Germany and Austria plunge into intense public soul searching about the euro, its meaning, its relevancy, the sheer and endlessly growing expense of maintaining it. To which are now added the $125 billion for bailing out Spain, the first in a series as Greece and others have shown: the bailout to solve the problem once and for all proves insufficient and is followed by more bailouts. Spain won’t be an exception. And then there’s Italy.
And yet, the German-language media scream about the expense of abandoning the euro. They call it the crazy option of returning to the D-Mark and warn of gigantic losses. But the very fact these discussions appear on the front pages of established newspapers moves the option a step closer to reality. Because, once the debate is opened up—and it’s a big can crammed with ugly worms—it’ll be difficult for governments to sweep all these worms under the rug and to revert to the con-game.
“As it’s going at the moment, the monetary union cannot function long term,” affirmed German Bundesbank President Jens Weidmann on Sunday. To avoid the worst turbulence, he called clarity: either establish a fiscal union with transfer of sovereignty to a central authority, or continue with autonomous national budget policies, in which case, “common liability must be limited.” He warned of the consequences of the break-up of the Eurozone, which would produce unpredictable and huge costs and risks. In the same breath, he cautioned that the threat of these costs and risks must not make Germany vulnerable to extortion.
Germans are worried. According the ARD-Welt poll published last week, 55% believe that it would have been better to keep the D-Mark, up 9 points from November, 56% fear for their savings, 78% believe that the worst of the euro crisis is still ahead, and 83% want Greece to leave the Eurozone if it doesn’t stick to the austerity and reform measures it had agreed to.