Euro was doomed from the start, says architect of single currency

[T_i_B]

Source: Daily Telegraph (UK)


In an interview with The Daily Telegraph, Jacques Delors, the former president of the European Commission, claims that errors made when the euro was created had effectively doomed the single currency to the current debt crisis. He also accuses today’s leaders of doing “too little, too late,” to support the single currency.

The 86-year-old Frenchman’s intervention comes the day after France and Germany took another step towards the creation of a full “fiscal union” within the European Union and David Cameron insisted that Britain must remain a major player in Europe. Mr Delors, who led the commission from 1985 to 1995, played a central role in the process that led to the creation of the euro in 1999. In his first British newspaper interview for almost a decade, he says that the debt crisis reflects a threat to Europe’s global role and even basic Western democratic values.

Mr Delors claims that the current crisis stems from “a fault in execution” by the political leaders who oversaw the euro in its early days. Leaders chose to turn a blind eye to the fundamental weaknesses and imbalances of member states’ economies, he says. “The finance ministers did not want to see anything disagreeable which they would be forced to deal with,” he says.

However, he singles out Germany for its strict insistence that the European Central Bank must not support debt-stricken members for fear of fuelling inflation. The euro’s troubles spring from “a combination of the stubbornness of the Germanic idea of monetary control and the absence of a clear vision from all the other countries”.

Read more: http://www.telegraph.co.uk/finance/financialcrisis/8932647/Euro-doomed-from-start-says-Jacques-Delors.html

[alp227]

1. Let countries run themselves...continental unions won't work. Colonialism is over.

[dipsydoodle]

2. Please enlighten us

as to who MADE any countries join the EU.

[JackRiddler]

11. Soon as you stop confusing the euro with the EU.

Most everyone seems to have that problem.

[dipsydoodle]

13. I replied to #1 : not the OP

Being UK I'm hardly likely to not understand the difference.

[T_i_B]

14. I'm sure that a few of our Eurosceptics don't understand the difference...

...between the European Union and the Euro.

[dipsydoodle]

16. Undoubtably

:hi:

[JackRiddler]

18. And indubitably!

:wave:

[Dead_Parrot]

3. "continental unions won't work"

Forgive me for saying so, but that's an odd thing for somebody in the United States to say. :)

[DRoseDARs]

4. Odd? It was more than that. Someone wasn't paying attention in US History class.

The 13 Colonies were wholly independent governments (subservient to the British crown, of course) prior to the revolution. Afterwards, they tried to maintain a great deal of that setup as enshrined in the Articles of Confederation (which, really, was a Libertarian-style government) and not unlike the European Union's government, our central government had all the power and authority of a little girl's pretend tea party. Our first government failed miserably (you can point to it to shut down a Libertarian for the lolz) and a few years later we ratified the United States Constitution. The commonwealths had their status demoted quite a bit to make for a much stronger central federal government. And the American Civil War (rather, during the Reconstruction re: Texas v. White) decided another key element: Secession is unconstitutional. Had the Europeans bothered reading up on some history, they might have avoided this.

[Dead_Parrot]

6. One of the advantages of being a British-born Kiwi...

...Is I never had to endure US History classes. :D

NZ being a independant Crown nation, we're around where the 13 colonies were. which isn't so bad, but you did insist on independance....

btw, secession from the EU is enshrined in their constitution - see article 50.

[enlightenment]

20. Apparently, however, 'secession' from the Euro

is a whole different kettle of fish.

Not to mention that the process for leaving the EU is hardly clear - enshrining it is all well and good, but it helps to think through the steps of actually doing it. For EU members who are not part of the Eurozone, it may be a fairly simple process . . . but they're not the one's causing all the Sturm und Drang in Brussels, either.

[T_i_B]

21. At the present time...

....I don't think that a country can leave the Euro without being turfed out of the EU.

However, it does like the EU may have to amend this as part of some treaty reform which is needed given the current crisis.

[LeftishBrit]

24. Secession from the EU isn't unconstitutional

Countries have every right to do so, if enough of their citizens vote for it in a referendum. British Eurosceptics are always demanding such a referendum, though it's not very likely to happen in the near future.

[FBaggins]

10. Not at all

Though understandable confusion.

The problem is the divorce between monetary and fiscal policy. That doesn't exist in the U.S.

Even in the right-wing misperception of early states rights.

[pampango]

5. DeLors sees the need for a "strong central power" in Europe's fiscal affairs or forget the Euro.

The euro came into existence without strong central powers to stop members running up unsustainable debts, an omission that led to the current crisis. Now that the excessive borrowing of countries such as Greece and Italy has brought the eurozone to the brink of disaster, Mr Delors insists that all European countries must share the blame for the crisis.

When “Anglo-Saxons” said that a single central bank and currency without a single state would be inherently unstable, “they had a point”, he admits.

Sounds like DeLors believes that the Euro needs a "strong central power" to be successful.

The Prime Minister was in Paris yesterday for talks with President Nicolas Sarkozy before next week’s EU summit. The meeting will begin discussions about changing the union’s basic treaties in response to the debt crisis.

Chancellor Angela Merkel of Germany insisted yesterday that such a treaty change was necessary and hailed what she described as concrete steps towards the creation of a “fiscal union”.

There seems to be at least a chance that DeLors may see the establishment of "fiscal union" in Europe that would perhaps meet the need for a "strong central power".

DeLors and others are right that a common currency without a common means of fiscal control is problematic at best and doomed to failure at worst. The current system obviously cannot be maintained. Either a common fiscal "strong central power" needs to be created or the common currency will disappear.

I hope the eurosceptics on the far-right do not achieve their goals of closed borders and tariffs within Europe, which will be more likely if the Euro collapses. It should be an interesting era ahead for the battle between those with visions of an open Europe versus those who want to go back to the "good ol' days".

[DallasNE]

9. A Bunch Of Finger Pointing

The central problem was not overspending by member nations as everybody keeps insisting. It was the lack of regulation that allowed those toxic sub-prime banking loans to bring down the system. Banking must be tightly regulated, period, yet that isn't even a consideration in this discussion.

[mwooldri]

7. Re: the Euro: "Up Yours, Delors"

Even though "The Sun" is a loathesome paper, and the article that accompanied the headline was extremely anti-French more than anti-Delors.... whoever put up that headline put up something catchy.

He may have said something about the Euro going all wrong from the get-go but IMO it went wrong way before that. Yes, the UK was very reluctant to join, but it did involve joining the European Monetary System (part 1), with Sterling officially shadowing the Deutschemark. Germany was (and is) the biggest country, had a history of low inflation, and as such this was the model to follow. However, Germany had high interest rates: 10%. The UK had to match.

Then came along George Soros.

You can blame George Soros for a lot of things, but a lot of Euroskeptics in the UK should be thanking him. His action - short selling Sterling - and forcing its value below the 6% difference allowed between currencies meant that the UK government and the Bank of England had to react: the Bank bought Sterling as fast as George was selling, and the bloody Tories jacked up interest rates to 15%. Eventually you could say that the Bank of England was running out of money so there was no choice - the government left the exchange rate mechanism, Sterling fell, Soros made a lot of money, and interest rates fell.

[DallasNE]

8. Partially Correct

Sub-prime mortgages are the central reason for today's financial crisis brought about by a lack of banking regulation. He is right about the European Central Bank not having enough independence to act in a timely manner due to interference from Germany. Only the second part goes back to the creation of the Euro zone and it would not have been that big of a deal without a wink and a nod to sub-prime junk.

[JackRiddler]

15. Yes, despite the real weaknesses of the euro's design from the start, this crisis is ultimately...

due to the Wall Street and Anglo-American banksters' MBS & derivatives fraud-plunder-and-crash of 2002-2009, and the resulting economic disaster.

The key moment in this development came with the fatal decision of the nation-states in 2007-2009 not to liquidate all of the zombies, haul in as many of the perpetrators as could be pinned for fraud, and create a new public financial system to replace the ruinous situation the banksters had created. Instead they bailed out the criminal institutions - putting them in a position of even greater power than before, to the point where they now get to enact coups in Italy and Greece - and backed and adopted the toxic assets that the FIRE frauds had created, pushing all of their public deficits over the edge.

Thus the banksters, instead of sitting in the dock, get to continue collecting their audacious bonuses and play judge over the "irresponsible" governments for the deficit spending that the banksters ultimately are (largely) responsible for.

Just like in the States and most of the rest of the world.

[and-justice-for-all]

12. I still find that a single global currency is best..nt

[JackRiddler]

17. Perhaps, if it were combined with the right of any community to issue its own.

[and-justice-for-all]

23. Thats defeating the purpose of a single global currency...

the point is to remove the problem, which is all these different currencies with their different values; not to mention the trading that takes place on those currencies which is a major contributor to economic woes.

The point of a single global currency, is to put everyone on the same value/currency system. The many different currency systems around the world are just one of many social dividers.

[DCBob]

19. Is he talking about the euro or the EU or both?

confused.

[Turbineguy]

22. I've always wondered.....

If the Americans were involved in the obviously flawed currency. Or was it just a minor weakness made large by greed and stupidity. It seemed during the early part of the process the US had no problem with the length of time spent legislating the shape of bananas and tomatoes.