The €uro Experiment
By Paul Wallace
Cambridge University Press – £24.99
In the fifth chapter of this overtly straight talking book, The Euro Experiment, author Paul Wallace writes: ”One of the many lessons of the euro crisis was that timing matters, both in the order of events and in the sequence of responses. The fact that Greece rather than Ireland was the first country to require a bail-out turned out to be highly significant.”
Really? The mere fact that the brokers, the bankers and the bail-merchants would even suspect that a nation such as Ireland, Portugal or, heaven forbid, Greece, would probably require some sort of bail out; wholeheartedly suggests the the financial manifestation of the Euro itself , would, over time, self-implode unto the monitory mess that it has sometimes proved to be.
That the title of the chapter (from which the above and the following quote comes) is ‘Bad Banks,’ inadvertently substantiates as much.
”If the order had been reversed and Ireland had toppled first, then it would have been clear from the outset that weak banks as much as weak states lay at the heart of the euro crisis. But because Greece was the first to fall, the crisis was misconstrued as predominantly a sovereign debt crisis, even though Greek fiscal improvidence was an extreme case by any reckoning.
”An extreme case by any reckoning” is an understatement worthy of regular repetition, if not a brutal reminder that perhaps some nations, Greece absolutely being one of them, really ought to have perhaps not been so readily embraced into the financial family of international banking.
Now I don’t in any way purport to be suave’n’savvy so far as any form of international economics are concerned, but having spent time in Greece, I’ve seen for myself how its economic infrastructure it is so deeply entrenched within a staid and self-reflexive, self-perpetuating quagmire, of basic backwardness. We’re talking a nation of (bad) plumbers, where cash and cash only, will suffice. We’re talking a nation where direct debit resolutely does not exist.
As for paying taxes, one may just as well go ahead and whistle the Greek equivalent of Dixie.
Said square-peg into a round-hole ideology, was/is Greece’s perplexing place within the Euro experiment, which is why this cannily entitled book is as pertinent, albeit understandably polite, as it is.
A mere few paragraphs later, Wallace writes: ”Euro leaders were if nothing else consistent in their reluctance to recognise the plight of their banks. During the global financial crisis of 2007-8, they had sought to depict it as an Anglo-Saxon affair for which they bore little or no responsibility.This version of events neglected the part played by banks in the currency union, along with British and Swiss lenders, in the financial crisis. Contrary to the self-serving narrative favoured in continental Europe, euro-zone banks were far from being innocent victims of Anglo-Saxon excesses. They too were knee-deep in the sludge of American subprime mortgage lending, which explained why losses on dodgy securities turned up in unlikely places such as German Landesbanken, publicly owned regional lenders that were a home for lost banking causes.”
Wallace’s use of the word ”dodgy” is key here, for we’ve since had to endure a number of euro zone crisis’, not least that of the Volkswagon debacle – something that really does bode well within the claustrophobic corridors of dishonesty and suffocating stasis;
Clear, concise, and written amid the prime parameters of acute balance – that is neither pro-euro nor pro-euro sceptic –The €uro Experiment finds Paul Wallace asking all the pertinent questions such as: ”How and why did the Euro crisis happen? And what are the implications for the economic and political future of Europe? As the University of Berkeley has remarked: ”The euro crisis, as Paul Wallace reminds us, is one of those times when history speeds up. Wallace slows it down just enough to render the crisis comprehensive without sacrificing the drama associated with the breakneck pace of events. The euro is not going away anytime soon, and neither is this invaluable book.”
Written by a leading commentator on the economics of the European Union, these nine chapters provide a clear and analytical guide to the advent of the euro experiment, and in my opinion, its hugely foreseeable crisis.