In response to an FT article by Philip Stephens on 9th July 2015, entitled 'Europe will pay the price for Greece'
On the economics:
"Europe will pay the price for Greece"
This is like blaming the last snowfall for the avalanche. It could have been many things and it would have been something. The Eurozone, which is not the same thing as Europe or even the EU, is paying the price for a creating a half-baked 'monetary union', because the politicians behind it wanted a federal Europe and the populations of several countries did not. They chose to go ahead with the euro, in my view, to get to a federal Europe by stages - by introducing a so called monetary union without the fiscal union that is necessary to make the economics work, let alone the politics. It was shortsighted to think that converting the debt from 19 weaker currencies into what was effectively the Deutschmark would work out well - the value of weaker countries' debt increased from day one. Moreover, it was blind to think that trading that debt with one exchange rate but in 19 different bond markets would not lead to a disaster eventually.
So when you say "a euro without Greece would be a much weakened enterprise — closer to a fixed exchange rate regime than a monetary union" you are closing the barn door on a horse that never lived in the barn - the eurozone has never been a 'monetary union' - the single currency is, and always has been, a glorified peg - and pegs always break.
On the politics:
"Without a cohesive Europe, Germany is lost. Former chancellor Helmut Kohl understood this when the Berlin Wall came down. The euro was the Franco-German bargain that would make a united Germany safe for Europe. Mr Kohl, though, foresaw a European Germany, not a German Europe"
Germany is lost? Bunkum. Speaking purely for myself I don't go to bed at night worrying about whether I'm safe from Germany. I celebrate Germany and all she has achieved. Your melodramatic tone sounds like you want to scare the children Mr Stephens. I'm not scared. I'm not worried about a German Europe, I'm more concerned about a wannabe federal Europe that thinks it knows what's best for everyone else, that ignored the warnings that were given prior to the creation of the euro, that turned a blind eye to Goldman Sachs when they hid the real state of Greece's problems off balance sheet, and that last week, when Mr Tsipiras announced the referendum, trotted out a number of 'officials' to make sure that the press were aware of the following - as reported here in Mr Spiegel's article of July 3rd:
"Trust is now so broken that several eurozone officials say even if Greeks defy Mr Tsipras and vote Yes in Sunday’s referendum, they may be unwilling to deal with his government to negotiate a new bailout"
That's what scares me Mr Stephens - a group of nameless people who think they get to decide who represents a sovereign nation. Here's my answer to those 'officials' - Resign. That's your choice. What is not your choice, is to decide who is deemed qualified to represent a sovereign nation. That's for democracy to decide - something that the EU has thrown out with the bathwater. You don't get to decide - the people do.
So yes, Brussels scares me more than Berlin, and certainly more than Athens.
'Of course, holding on to Greece would be costly. Losing it would be seriously expensive'
I think that you are missing the point Mr Stephens, as will, I suspect, the 28 EU leaders when they gather on Sunday to 'decide what to do with Greece'. Greece is the latest snowfall - the avalanche is eurozone sovereign debt; un-payable and ultimately unserviceable.
They should be discussing what to do with the euro, what to do with the banks they've been propping up for 7 years, and ultimately, the real cause of our problems - what to do with the debt.