Like Economist, but heavier

Saving Pinky’s Bacon
or, how to save the Euro: Evict Germany!

Industrial Powerhouse is out-of-kilter with rest of Eurozone

Article originally published in GTG August 2011 – The GTG: years ahead of the curve!

Save Pinky's Bacon

Brussels, Mon July 18th:

As, one by one, the ‘PIGS’ get spit-roasted (and increasingly look like being accompanied by a super-size side order of burnt pasta) it’s becoming clear that the Eurozone can’t continue to live the fantasy of having monetary union without fiscal union. It’s simply not possible to reconcile the opposing requirements of the pathologically spendthrift Olive Oil Economies with the uber-efficient Industrial Reich in the north

Nice while it lasted
It’s true both sides until recently have had a good run in the Euro club. Germany benefited from a currency that’s been held down in value by the lesser performing members, helping Germany’s exports whilst not damaging its perceived wealth (there are still plenty of holidays and luxury goods to be bought within the Eurozone, avoiding the need to spend valuable hard currencies like the US Dollar). And for a while it was even possible for the German government to live the dream of running an empire without actually having to pay for it

The economically inept have had a good time too, partying and treating themselves to lots of toys on their newly acquired low rate credit cards, and without any bothersome parental control

But sadly the credit cards are maxed-out and the minimum payments overdue. Now they have to pay. But how?

Time to get real
The Eurozone needs a fiscally consistent economic policy across all of it’s members. One way this might be achieved would be to move towards centralised budget controls, but this would require a transfer of wealth from the richer nations to the poorer ones. That’s not likely to be popular in the north, or even in the beneficiary nations who are unlikely to take kindly to having their affairs run directly by Berlin …oops, sorry, we meant Brussels! 😉

So the only option is for the member nations to grasp the nettle and evict the countries that don’t fit with the ethos and expectations of the Eurozone

Obviously, Germany will have to leave!

Only then will the Euro be able to fulfill its true role as an international currency: as an easily devalued sanctuary for clapped-out old-world powers seeking to prolong their fantasy of being rich and important. The terminally indebted will be able to print money and rely on inflation to deflate their debts

Hard Option
Initially it might be a little tough on the Germans – suddenly having to fend for themselves and compete with other industrial nations without the subsidy afforded by a soft currency – but in the long term we’re sure they’ll pull through and be more efficient than ever. They can always merge with Poland, the Czech Republic and the Netherlands to increase their economies of scale. They’ve done that before, after all

And on the plus side, they won’t have to spend all their savings feeding the PIGS!

‘PIGS’: the tasteful contemporary acronym for Portugal, Ireland, Greece, Spain