Europeans – the Good, the Bad and …

For years some nations that are part of the European Union have be criticised or being bad Europeans. The original Bad European was the United Kingdom, who failed to whole heartedly follow all the proposals about EU law and policy emanating out of Brussels, refused to join the euro and opposed a single EU Federal state. The Good Europeans were Germany, France and the Benelux countries and as the EU enlarged nations like Greece and Ireland were considered good Europeans and Poland and the Czech Republic were characterised as bad Europeans.

There is a financial crisis in the Eurozone. If it is left unresolved the economies of the Eurozone will suffer greatly and the Euro will inevitably be greatly devalued. EU nations not in the Eurozone will suffer in consequence but nowhere near as much as those within it. When the chips are down and the nations are looking for a solution to the Euro crisis what are the Good Europeans doing?

Germany is now no longer following the tradition of the three musketeers. It is not “all for one and one for all” but “every man for himself”. Mrs Merkel does not support a single European Bond, guaranteed by all Eurozone nations because she fears it will encourage profligate nations to borrow more than they can afford to repay although in the process they might spend a significant part of the borrowing on goods made in Germany.

So the single currency stutters on, like a drunkard looking for a convenient pub that will provide him with drinks on credit.

Like all nations Germany needs to borrow money long term and its latest round of borrowing by way of bond auction attracted just over half the amount that Germany asked for. I suppose, if you like conspiracy theories, you could claim that the Germans priced the bonds to produce this result for some nefarious purpose, but that is very much like our drunkard urinating on his own doorstep – self defeating.

The Bad Europeans are encouraging the Good Europeans to get the Euro sorted out. It may mean in effect fiscal union, but that is an inevitable requirement of a single currency. The markets have shown that without fiscal Union and some greater degree of central control of Eurozone nations’ budgets, the Euro will never work properly and safely, just like our drunkard having finished his quest for a drink on credit and his urination, jumps into a car to drive off at full speed.

It is ironic now in times of crisis we find that the Bad Europeans are not all that bad and the Good Europeans are far from good. It has all become rather ugly.

 

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