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Euro Disunification

October 26th, 2011 - 10:56 am

It’s not exactly the lights going out all over Europe, but it is a stern warning from Angela Merkel:The Eurozone

In a dark blue jacket reflecting the mood in and about the eurozone, Merkel abandoned her usual cautious rhetoric warned outright of a war.

“Nobody should take for granted another 50 years of peace and prosperity in Europe. They are not for granted. That’s why I say: If the euro fails, Europe fails,” Merkel said, followed by a long applause from all political groups.

“We have a historical obligation: To protect by all means Europe’s unification process begun by our forefathers after centuries of hatred and blood spill. None of us can foresee what the consequences would be if we were to fail.”

Don’t get too worried. Merkel isn’t talking about sending the Wehrmacht — I mean the Bundeswehr — into Belgium. Rather, I’m sure she’s warning more generically about some future conflict like the one in the mid-’90s in the Balkans. Only this one would be in the mid-Teens. In the Balkans.

But that’s not to say that Germany isn’t taking any preemptive defensive actions:

Dr. Pippa Malmgren, a former economic advisor to George W. Bush and a former advisor to Deutsche Bank (DB). According to Malmgren, Germany has already ordered the printing of Deutsche Marks in anticipation of a possible withdrawal from the EU.

I was about to say Germany just got caught with its hand in the piggy bank — only it’s Germany’s piggy bank, isn’t it?

Very drunk at a party at Perry de Haviland’s Chelsea flat several years ago, I made a surprisingly cogent argument about why the euro was doomed to fail. Put short: A currency can be only as extensive as labor is mobile.

Put longer: Our fifty-seven states do just fine with one currency and one monetary policy, because when California is in the dumpster, people can and do move to where the jobs are, in Texas. But the 17 members of the eurozone can’t use a single currency and a single monetary policy. Because if France goes into recession while Germany is enjoying boom times, a million Frenchmen aren’t going to pack up and head east across the Rhine.

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