Adrian Pabst contends that the German hardline stance is pushing Greece back into an economic recession which will increase the value of her debt and therefore require even more savage cuts to public spending, which will trigger a vicious circle of debt-deflation. That could engulf the other highly indebted countries in the Eurozone. In turn, this could plunge the EU into an ever-deeper social recession.
Instead, Adrian thinks that the German Government should follow the French lead and provide guarantees to State-owned banks buying Greek bonds, thereby helping to bring down interest rates and alleviate Greece's debt burden. To Adrian, the alternatives of either a full-blown Eurozone bailout or an IMF structural adjustment programme are much worse and would further undermine the EU's credibility.
To which my answer is, what credibility? Still, I have always said that the Euro would be finished as soon as the Germans refused to pay for, say, the Portuguese, or the Italians, or the Irish, or the Greeks, or the Spaniards. But even I thought that it would be one of them. Not all of them. All at the same time.
Not that I like the term PIIGS. But let them adopt the arrangement that one of them had into the 1980s, of issuing their own currencies, but with the values of those currencies fixed permanently at whatever that of sterling happened to be at the given time. An option for plenty of other countries, too. Indeed, for as many as wanted to adopt it. The Euro has failed, vindicating those, such as Gordon Brown and not Ken Clarke, who insisted on staying out. Deal with it. Adopting the dollar means subservience. Deal with that, too.
And after the return of the Sterling Area, beginning with countries none of which was ever in the British Empire (what is now the Irish Republic was in the United Kingdom, something quite different and the key to understanding the true history of the Irish in the British imperial period), how about the return of the Commonwealth Preference Area, again including, as the Commonwealth itself now does, countries whose accession constitutes, entirely voluntarily, their first ever tie to Britain?
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As of course you know, it wouldn't be Portugal's first ever tie. Or Greece's, although that is a more complicated story.
ReplyDeleteYou are very aware of Belgium's historic links to Britain. A Sterling Area country where the EU is HQed, I like that one. That would not affect the euro, nor would Germany leaving and the ECB still being in Frankfurt.
Iraq stayed a Sterling Area country for a long time, so why not become one again? And the Palestinian Authority, now there's a thought? Iraq at least was created by Britain, same as Belgium. Or, as you pointed out not long ago, Uruguay. A Sterling Area country in South America and on the border of Argentina?
Belgium, Iraq, Palestine, Uruguay and even Portugal all have longer standing relationships with Britain than several countries that have recently joined the Commonwealth, so they would be as welcome in that as in the Sterling Area.
The possibilites are almost endles.
We could call it Poundland.
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