With the exception of a small group of people, hardly anyone agreed with them. The four men argued that the euro could not remain stable, because the economies of the participating countries were too disparate and the control mechanisms too lax. This would jeopardize German price stability and affluence. Besides, they argued, a political union had to precede a monetary union.The four economists were ostracized by other academic institutions and the media, including professional publications. No doubt, with their absence, commentators could "legitimately" claim that there was a full consensus among experts on the necessity for the euro.
When the court in Karlsruhe dismissed their suit, they became the objects of malicious insults. Former Chancellor Helmut Schmidt, a member of the center-left Social Democratic Party (SPD), called them "idiot savants with no sense of history." It was an insult Hankel would never forget. After all, Hankel himself was a former close colleague of the legendary German Economics Minister Karl Schiller, who also belonged to the SPD, as well as being the former head of the Landesbank in the state of Hesse. He had also taught at Harvard and Georgetown University, among other institutions.
Well, the times, they are a'changin'.
The contrary professors got together again, and Schachtschneider, the legal expert, spent two weeks drafting a new complaint. This time it was directed against the bailout package for Greece. Then the four elderly gentlemen made another trip to Karlsruhe. On May 7, after the German parliament, the Bundestag, had passed legislation to approve the financial bailout plan, they submitted their constitutional complaint, together with a request for a temporary court injunction that would prevent then-German President Horst Köhler from signing the aid bill into law before the Constitutional Court could consider their complaint.The four professors have been reinstated in their colleagues' estimation and their prescience acknowledged. Their request for a court injunction against the Greek bail-out was dismissed but now the Karlsruhe court is reviewing their complaint at length. There are publications being planned that would spread their ideas wider and explain their case in legal and economic terms. Above all, the public is now with them. As Bruno Waterfield reported two days ago,
A few days later, an ad appeared in the respected center-right daily Frankfurter Allgemeine Zeitung. It was paid for by Dieter Spethmann, the former CEO of the giant German industrial conglomerate Thyssen, who had since joined the group. The copy read: "As was once the case before the outbreak of the French Revolution, Europe's politicians have now lost any sense for the rights, concerns and expectations of their citizens."
It was a call for mutiny, the goal being to encourage citizens to fight back against politicians who had knowingly violated the "no bailout" clause in the Maastricht Treaty, which prohibits an EU member state from financially assisting another member state. The professors argued that violating this clause would turn the monetary union into a bailout and debt community.
More than 51 per cent of Germans want to axe the euro after widespread fury that Germany's taxpayers have been forced to come to the rescue of Greece and other high spending southern European countries.It was, after all, one of the many things the four professors warned about in those far-off days - that the members of the euro were economically too disparate and that Germany would end up bailing them out.
Only three in 10 people in Europe's largest economy now support the single currency, a flagship of EU integration and Germany's European policy.
The Ipsos opinion poll found that disenchantment was highest, 56 per cent, among Germans over 50, those old enough to remember repeated promises that Germany would never have to bail-out other countries as the price of the euro.
The Euro in itself is not a bad idea, and there is no reason it cannot work,provided it is understood that no state is obligated to bail out another. In the US states( in the 19th c.) have defaulted on their debt,but the Federal Gov't rightly didn't do a thing.ReplyDelete
This is just a way to either bail out their own banks or to further push political integration.
...and, yes, centralized socialism was another good idea, if it only had worked the way its proponents wanted it to work. OK, one would have to throw away a few outmoded concepts like freedom and self-reliance, rule of law etc etc, but in principle it could have been such a good thing...ReplyDelete
No, both centralized socialism and the euro were and are faulty concepts. I will not spend time to reiterate all the reasons the euro won't work neither in reality nor in principle. Please, read the full complaints of the professors. There are fundamental differences between the euro and the dollar, but the history of the USA is replete with political and military conflicts in no small part due to the conflict re a centralized banking and monetary system. Too few Europeans know the history of the US. But then even an event so near to us both geographically and temporally as the break-up of Yugoslavia is totally forgotten.
Do you remember the Dinar?
Or the LMU for that matter.ReplyDelete
How the Euro does depends mainly on what the ECB does. Of course the European governing class (provincial and federal) have shown an ability to wreck anything they touch. The Euro may take the fall for that,but it needn't be that way.ReplyDelete
It's not a very sensible currency, renminbi. The decision was a purely political one and the aim was to make economic subservient to politics. That's really the point.ReplyDelete