In response to an FT article by Wolfgang Münchau on 17th April 2016, entitled 'Germany's local roots put European stability at risk'
THIS POST WAS HELD PENDING BY THE FT FOR 10 HOURS. IT WAS RELEASED AFTER A PERSONAL EMAIL TO MR. MUNCHAU, ALTHOUGH NO EXPLANATION WAS GIVEN BY THE FT - SO THIS COULD HAVE BEEN A COINCIDENCE
"This episode is a reminder that the collective spirit that was so strongly present in the first years of the Eurozone has gone" - Wolfgang Münchau
Pre-existing weaknesses and hairline fractures reveal themselves under periods of stress - that is true in all organisms, and in all organisations, political or otherwise. Monetary union without fiscal union and a consolidated bond market is a built-in weakness of the Eurozone - an inevitable fracture point under economic stress.
The economic stress is building because, amongst other geo-political factors, the policies of QE/ZIRP/NIRP do not work for the majority of the population. They are designed to keep the banking system afloat and to paper over the busted balance sheets of the sovereigns. These policies benefit governments, banks and rich people - they do nothing for the living standards and/or employment prospects of 'ordinary' people. For businesses they make intelligent capital deployment extremely difficult, because they have destroyed market-pricing mechanisms. We don't have markets - we have front-running opportunities, or as I prefer to call them - crime scenes.
Back to the organisation under stress - The Eurozone was set up in this compromised fashion because the idea of a fiscal union, AKA Federalism, was unacceptable to the majority of national populations - and still is. The euro was supposed to be phase 1. When everyone saw that it worked, phase 2 - fiscal union was supposed to follow. The symptoms you describe Mr. Münchau, are an inevitable result of employing a strategy of federalism by stealth. There is not, and never will be, a sustainable 'collective spirit' under fundamentally dishonest conditions. Progress towards it under benign economic conditions is a chimera - under stress the real state of the organisation will be revealed.
Until this issue is addressed and resolved, the euro will stagger towards 'ever closer collapse'. Given the lack of wisdom, honesty or courage of the main powers involved, I believe such a collapse is inevitable.