Monday, November 29, 2010

Cui Bono: For Whose Benefit?

So Irish citizens - men, women and children - are to be crucified on a cross of gold, to shore up the failing Euro.

These huge loans are not for Ireland's benefit.


Ireland needs export-driven industry, creating jobs, the means to repay debt, and to move back to a sustainable prosperity.

But Ireland is small country on the periphery of Europe; exporting is more expensive than in Germany. For this and other reasons the Euro is an over-valued currency in Ireland. A new Irish Punt would be valued much below the Euro.

Ireland cannot export successfully and remain in the eurozone. The Euro blocks Ireland's route to recovery.


Meanwhile German industry exports with increasing success. If Germany restored the Deutschmark it would be valued way above the exchange rate of the Euro. Like China, Germany has an undervalued currency. This has encouraged the development of the huge trade imbalances which caused the crisis.

Some are saying that the value to Germany of an undervalued currency exceeds the costs of loans to states crippled by the Euro, so Germany will fight to keep the Euro until this calculation reverses.

Unless the German Constitutional Court declares such Euro rescues are unlawful. I understand the court's judgement is expected in February.


In the meantime we should recognise reality: the European Union, and specifically the Eurozone, is the Deutsches Wirtschafts Reich - the German industrial empire.

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