Tuesday, 24 April 2012

The core, the core

Basil Fawlty: “Well, I'll just get your hors d'oeuvres.”
Basil Fawlty: “Hors d'oeuvres... vich must be obeyed at all times vitout qvestion!””

Fawlty Towers – “The Germans”

Something in the Eurozone is becoming increasingly obvious. The meaning of the core has changed. As the Dutch look set to reject the fiscal suicide pact it may leave a core of just one; Germany.

What do you call a core of one. I call it a periphery. So really what the Eurozoners should be doing is calling a timeout huddle and concluding that what they need to do is kick out the Germans from the Eurozone. Then the new core can at least agree on one key policy which is that they need to print a lot of money. The Germans can have back their beloved DM and enjoy the subsequent deflation and depression and thus stop feeding at the exporters trough of a devalued currency.

Any other policy is madness because no other country follows the rules like the Germans. In Greece, Italy, Spain or France the rules are there for other people not for one’s self. In Germany the rules are there for all and they abide by them. This subtle distinction is not about to be dissolved in the crucible of greater integration.

The only other people who really take the rules at face value are we Britons. Foolishly we actually listen to the judgments of the European court of human rights or the EU directives on the use of ladders. This is why Cameron was a fool to walk out of the EU fiscal death compact. He should have seen that the only people who thought the compact and its rules would work were the Germans. Everybody else was playing the European solidarity game in full knowledge that they could declare ‘force majeure’ later when they put the bill if front of their parliaments.

In some ways it makes you proud to have a leader like Cameron. Naïve and gullible though he may be he does seem to have an ounce of humanity in him which he couldn’t subvert fully to the game of abstract politics played in Brussels. Perhaps he doesn’t have to because with our own currency we can still print as much money as we want to buoy our debt markets whilst calling it fiscal virtue.

Where does kicking the Germans out of the EU get you? Back at square one of European integration regressing sixty years to arrive at the uncomfortable truth that Germany is just too big and effective for the rest of Europe.

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