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You are assuming killing the euro is easier. I can't see how it really could be. Both require the bulk of our political classes to admit error, and the arguments against austerity are on much stronger footing than the arguments against large currency areas. Because there really are no examples of austerity working well, but there are existence-proofs for large currency areas.
by Thomas on Thu May 29th, 2014 at 06:30:41 AM EST
[ Parent ]
Admittedly, but they all involve very strong internal transfers.
So the Euro could work if pensions, benefits, defense, border controls (yes, the Shengen agreement is a massive subsidy for Germany and other countries in the middle of it) were paid at the federal level. That would not be enough (cultural and linguistic differences would still mean that assymetric shocks would sting harder, so average inflation would have to be higher to help assuage them), but certainly necessary.

Earth provides enough to satisfy every man's need, but not every man's greed. Gandhi
by Cyrille (cyrillev domain yahoo.fr) on Thu May 29th, 2014 at 06:45:14 AM EST
[ Parent ]
border controls (yes, the Shengen agreement is a massive subsidy for Germany and other countries in the middle of it)

Do you mean the cost of implementing and maintaining Schengen border controls? There is EU funding for that.

*Lunatic*, n.
One whose delusions are out of fashion.

by DoDo on Thu May 29th, 2014 at 06:54:06 AM EST
[ Parent ]
But is there enough funding? For it not to be a subsidy, the external border control should be funded by EU money in its entirety, not just a fraction.

A society committed to the notion that government is always bad will have bad government. And it doesn't have to be that way. — Paul Krugman
by Migeru (migeru at eurotrib dot com) on Thu May 29th, 2014 at 08:04:12 AM EST
[ Parent ]
the border controls, full-paid or not, are one thing, the costs for refugees and illegal immigrants another.
by IM on Thu May 29th, 2014 at 12:43:12 PM EST
[ Parent ]
The Euro may die by accident. Political or financial accident involving some country or bank. In fact, after Germany laid down red lines blocking any policy solution to the Euro crisis, an uncontrolled breakup is the only politically feasible solution.

A society committed to the notion that government is always bad will have bad government. And it doesn't have to be that way. — Paul Krugman
by Migeru (migeru at eurotrib dot com) on Thu May 29th, 2014 at 08:05:16 AM EST
[ Parent ]
Because breaking the Euro requires, in extremis, only one member government (but realistically more like a handful) deciding to bugger this for a game of soldiers.

Breaking austerity without breaking the Euro requires a supermajority of member governments to take a sufficiently strong stance against austerity. And that supermajority must include Germany.

And I cannot tell a plausible story about how to build an anti-austerity coalition big enough and powerful enough to bully Germany into unconditional surrender on the most important German foreign policy objective of the last forty years, without passing through a several months (or years) long stage where the anti-austerity coalition is:

  • Big enough and strong enough to break the Euro.
  • Big enough and strong enough to pursue anti-austerity policies outside the Euro.
  • Not big enough and strong enough to dictate policy to Germany.
  • Under extreme pressure from their own stakeholders to deliver on their anti-austerity promises in order to retain sufficient legitimacy to be able to effectively govern.

If the process of building an anti-austerity coalition will break the Euro anyway, then there is no reason not to gather up anti-Euro dissidents with other motives than ending Austerity - anti-Austerity dissidents who do not have the stomach to, if necessary, break up the Euro will break off anyway once push starts coming to shove.

- Jake

Friends come and go. Enemies accumulate.

by JakeS (JangoSierra 'at' gmail 'dot' com) on Thu May 29th, 2014 at 09:00:02 AM EST
[ Parent ]
I believe your conditions are fulfilled by an anti-austerity coalition of two countries out of France, Italy and Spain. The trouble is, I don't see that happening

A society committed to the notion that government is always bad will have bad government. And it doesn't have to be that way. — Paul Krugman
by Migeru (migeru at eurotrib dot com) on Thu May 29th, 2014 at 09:55:17 AM EST
[ Parent ]

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