Leaving the euro vs. the risks of staying

Robert Kuttner looks at the promise and likely consequences of the countries currently under Germany's austerity boot leaving the euro currency in Cyprus's Big Bluff The American Prospect 03/21/2013:

It would not be pretty, but it has been done before. In fact, in the past century, some 69 countries have abandoned currencies. It happened after the break-up of the Soviet Union. It happened after World War II. In fact, withdrawal of the Hitler-era Reichsmark in favor of the post 1948 Deutschmark was accompanied by massive debt relief for Germany. (How about that, Ms. Merkel?)

After a relative brief period of worse economic pain, these small nations would emerge with far greater freedom of action over their own economic destiny. They would have currencies that were a lot cheaper internationally, which would be good for exports and for tourism. In the short run, they would have to finance most of their capital needs internally, but foreign capital would soon return. It always does — especially once economies start growing again. And freed from artificial austerity burdens, these nations could resume growth.

The Germans, of course, would have fits. Because Germany enjoys the greatest advantage from the mismanaged euro and would suffer a relative loss if the Eurozone shrank and some debts to German banks were written off. But what are the Germans going to do — invade? Happily, the allies after World War II insisted on a very small German army.

Yanis Varoufakis reminds us that austerity can have grim political consequences. And the European Union, which has always been a democratic project up until 2009 and the start of Angela "Frau Fritz" Merkel's authority crusade against various other eurozone nations, can also exist as a union that is very undemocratic and imposes brutally destructive conditions on some of its members in Lest we forget: The neglected roots of Europe’s slide to authoritarianism 03/14/2013:

The lesson to be drawn from this is not that the European Union is totalitarian by nature but, instead, that it is not incompatible with totalitarianism and, thus, that the current democratic deficit that grows with every twist of the austerity screw bodes ill for Europe’s democrats.

In brief, a multitude of evils can hide behind the ideological veil of top-down European integration, especially when it is accomplished in the midst of (even by means of) a vicious, asymmetrical recession. So, I am writing today’s post as a Europeanist who wants to imagine Europe as our common home but who also fears that Europe is sliding into an unbearable authoritarianism threatening to turn our common home into a shared concentration camp.

Frau Fritz, of course, doesn't see it that was, as Klaus Stuttmann's inspired 28.06.2012 image reminds us:

"Enlightened Prussian Absolutism"

Frau Fritz is saying, "Thrift, incorruptibility, efficiency and disciple: THAT's what Europe has to learn!!

This is the original Old Fritz, aka, Frederick the Great, symbol of Prussian militarism:

And, yes, "Old Fritz" (der alte Fritz) also means the Devil in German just like in English.

Tags: angela merkel, austerity economics, eu, euro, european union, cyprus