"Euro under siege as now Portugal hits the panic button" -- headlines in
today's Daily Telegraph. With Ireland also, two countries are now in
immediate peril and yesterday at least three pairs of premiers were
screaming at each other. I can only think that the EMU is now the weakest
link in the world currency fiasco.
When the EMU breaks up -- as I'm sure it will (with maybe the EU to follow)
-- there'll be more European animosity towards (an economically successful)
Germany than there ever was when WWI and WWII started. Thankfully, there
won't be warfare this time because no European country has a large army and
re-arming simply couldn't be done within years no matter how much money is
printed (besides, young males in all the countries would simply refuse to
be conscripted as they were previously), but the wreckage could be
considerable.
I can see the PIIGSs (Portugal, Ireland, Italy, Greece and Spain) going to
the wall and, probably, never recovering this side of 2100. I can't see
much of a future for France and the UK either (neither having sufficient
discipline to see adequate austerity plans through -- and to what end
anyway if the rest of the world sets about competitive devaluations?).
I can't see another G20 taking place. There were screaming matches at the
last one, too. The currency situation is already too chaotic for that. If
there's to be a solution then it will only take place in the same way as
Bretton Woods I in 1944 took place (effectively, negotiations between two
countries only, even though there were 43 other attenders). It was then
America -- the big rising star -- and Britain -- the big declining star.
It'll be the same again, even if 200+ countries attend Bretton Woods II.
This time, the inner negotiating room will contain China and America
only. Meanwhile, however much the currency chaos develops and however much
various personnel from both countries might scream at each other from time
to time, neither country can't afford to fall out with the other
permanently. Each has far too much invested in the other.
Keith
Keith Hudson, Saltford, England
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