Surely the break-up of the Eurozone cannot be far away now. The
European Central Bank is now trampling over the spirit of its own
constitution by buying the debts of Greece, Portugal, Spain, Ireland
and Italy. (Technically and legally, it is not permitted to do so
directly. It is getting round its own rules by buying bonds
indirectly via commercial banks.) Germany has said No to the further
idea of "Eurobonds" -- comprehensive debt buying -- and, in any case,
it would have to be ratified by 17 individual parliaments (and
there's no hope of that).
The German President, Christian Wulff, questions the legality of what
the ECB is already doing, never mind the new Eurobonds that France
and the ECB are proposing. Chancellor Angela Merkel is against the
proposal. So is former Chancellor Helmut Kohl -- originally a prime
mover of the Euro and the Eurozone. For all his previous faults as a
massive inflator of the American dollar, the now-retired Alan
Greenspan is as objective an observer of Europe as anybody. He is
quoted as saying a day or two ago: "The Euro is collapsing". On top
of all that, and where money speaks louder than words, European banks
are having to pay unprecedented insurance premiums (Credit Control
Swaps) of over 3% on the bonds of Greece, Portugal, Spain and Italy.
The point now is not so much when the Eurozone is going to collapse,
but how. Is it going to be in partial catastrophic (albeit sensible)
steps by means of Greece, Portugal, Spain, Ireland and Italy
withdrawing one by one at, let us say, six-monthly intervals? Or by a
larger catastrophic step (almost as sensible) if Germany, Austria,
Finland, Netherlands and Flanders (northern Belgium) wrench
themselves away bodily as a new Deutschezone, leaving France as the
Great Panjandrum over the remainder? Or by total mayhem?
If the last case, then, via their banks, the UK and America will also
collapse even further and faster into the Great Recession. And China
will also be affected very badly. Its only recourse then (if its
government can hold down social unrest for long enough) is to set
about creating a new currency zone comprising Russia (for its energy
resources), the Deutschezone (for its engineering expertise) and the
other emergent countries (for their consumer markets). If that's the
case, and if the new Emergent Zone wants to ensure that it can
continue make economic progress while America and Europe repair
themselves over the next generation or two, then it will have to do
what America has being doing for the last 70 years or so. This is to
offer inducements by way of salaries, habitational environments and
research facilities to the best scientific brains of the world -- of
which America now contains the cream. And, of course, they'll be as
footloose as European scientists have been before them when going to
America, ever since Einstein in 1933.
Keith
Keith Hudson, Saltford, England http://allisstatus.wordpress.com/2011/08/
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