by Jerome a Paris
Wed Aug 31st, 2011 at 10:15:24 AM EST
Hans-Olaf Henkel, the former head of the Federation of German Industries (BDI), has written a rather stunning article in yesterday's FT: "A sceptic’s solution – a breakaway currency where he suggests that Northern Europe, led by Germany (but excluding France and Belgium), launch a new currency. While that idea has been mooted here on ET as a possible solution the the current crisis, and while people here may again find it old hat to assert that Germans are on a path to break Europe, what struck me here was the rather careless tone about what this would mean for Europe:
Implementing plan “C” [Austria, Finland, Germany and the Netherlands to leave the eurozone and create a new currency leaving the euro where it is] requires that four underlying problems are addressed separately.
We must rescue banks, not countries. Stabilisation of banks on a national level should replace current European umbrellas. In many cases, this requires temporary bank nationalisation. Second, Germany and its partners in a new currency must forgo a significant portion of their guarantees to help refinance Greece, Portugal and others. As much of this money is already lost, this is an acceptable price for an “exit ticket”. Third, there must be a new European central bank based on the Bundesbank, preferably not led by a German. The new currency should not be called the “D-Mark”. Fourth, mechanics for entry would be similar to those for getting into the euro.
While many seem to have been lately blithely willing to dump Spain and even Italy out of "core Europe," this goes even a step further in explicitly calling for a superior Northern Europe and an inferior Southern Europe, and putting a hard monetary border between Germany and France (and Belgium - as one of the commenters to the article says - the Flemish region would likely do all it could to join the "Neuro"). The mind boggles that history can be so casually forgotten...