May 17, 2012

A matter of timing?


Richard North17 May 2012   

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It is difficult to know with people like Peston whether they are being obtuse, or attempting to be Machiavellian. In a sense, though, it doesn't really matter. The effect is the same – they get it spectacularly wrong.

The error of the Great Peston, this time, is in candidly advising us that "creating the currency union was not a random act of collective economic suicide". Rather, he says, it was "in some senses a rational or even noble project that was either premature or too late". But, as we will see, this is more an error of omission.

Calling the single currency a "currency union" is odd – that is an unusual term, and it might give some insight into what passes for Peston's thinking. But his headline premise that the euro's survival "requires political union" is the one that grabs attention – as indeed was intended.

In fact, Peston is quoting former German chancellor, Gerhard Schröder, who has recently declared: "The crisis makes at least one thing obvious and that is we need more of Europe, we need the political union as the only way to save the stability of the euro".

When we then get is the view that Schröder, and the likes of Jean-Claude Trichet are the witnesses (to put it not stronger) of a tragedy. These post-war leaders, "whose intentions would be seen by many as honourable, made a series of disastrously ill-timed decisions".

So, according to this Giant Amongst Men, it is all a matter of timing. And now, with sovereign debt spiralling out of control, "sharing of the debt burden requires near revolution in the way the EU is governed – we need a federation, a United States of Europe".

What Peston misses out – and one can only think deliberately – is that we are currently seeing the doctrine of the "benficial crisis" at play. The founding fathers of the euro – most recently Jaques Delores and then Romano Prodi, all acknowledged that the single currency could not survive without economic governance.

They also knew, when the euro was being introduced, that there was no appetite for that degree of political integration. Thus, in 1999, they went with what they could get – a "currency union" in the hope that it would some day force the pace and bring them political union. The sequence then was intentional, the timing quite deliberate. They went with what they could get. That was always the plan.

The idea, of course, was that a crisis could be exploited, just as it is being done now, to push the eurozone members into that final, planned stage. And it is there that they have got it so wrong. The crisis is far bigger than anticipated, and the "colleagues" are not prepared to take the step of abandoning what is left their sovereignty. Even now, they refuse to hand over their economic governance, one of the final stages in creating the long-dreamed of federation.

"Without such a federation, can the single currency survive?", the fatuous Peston then asks Helmut Schlesinger, "another influential central banker", now retired. And here the response is entirely predictable. It is an "either-or" answer.

Either we get "the United States of Europe, that is an actual political union, and then that political union gets its own currency", says Schlesinger. "But then it is no monetary union any longer, but the currency of that new state". The alternative is fairly obvious. His prognosis is "very limited in time".

So the game enters its final stages, and the "colleagues" are losing it. They are not going to get their "United States of Europe". The great gamble has failed, and the political élites have taken the economic system of Europe – and the world – to the brink and beyond, for nothing - to the ruin of us all.

Yet, to Peston, this reckless, ill-considered gamble was a "rational or even noble project". Rational, it most certainly was. Noble, in its intent, it might have been. The idea – as always with le projet - was to prevent war between the French and Germans.

It was, however, also dangerously, malignantly ill-conceived. But you will never get any sense of that from the BBC's Robert Peston. It is simply a heroic failure by honourable men. To say that might even be rational - but to omit the rest of the detail is mendacity.


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