When the euro-nag is lying prostrate on the ground, snorting its last breaths in agony, there comes a time to stop flogging it. But the Germans and the French appear to believe that, if the Mediterranean passengers in the back of the cart would only tidy themselves up a bit, the poor bloody horse will prick up its ears and resume its place in the traces. Well, it's not going to happen.
The fact that last week's grand deal is rapidly disintegrating is neither here nor there. More pertinent is the absence of any idea how to approach the differing levels of economic performance within euroland, other than continued bouts of austerity for our southern cousins. And each time, austerity reduces their capacity to grow. Greece is in a vicious spiral where each new round of public expenditure cuts makes it ever more difficult to repay its debts; and Spain, Portugal and Italy are being prescribed the same medecine. There is no sensible future in this course.
So now is the time to let those weary passengers jump off the cart and revert to their original currencies. To be sure, it would be a painful process. The European banks would take a severe pounding, to the extent that some of them would have to be nationalised. The inevitable devaluation of the drachma, the peseta and so on would result in a significant blip in inflation for those countries concerned. But as their exports became cheaper and their tourism industries revived, they would at least have a chance of restoring their economies to some form of equilibrium.
So let them go. Locking them into an economic straitjacket designed for and dominated by Germany will only come to grief.
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