• Text size      
  • Send this article to a friend
  • Print this article

Do the sums: We can't afford to lose the euro

George Soros is a speculator who is entitled to be taken seriously as a human being.

The conjunction does not arise often. History might say that the man who almost broke the pound managed the trick by understanding the species, its vanity and greed. The blunt reality would that Mr Soros became a billionaire by grasping how stupid people can be.

He now says, regardless, there are three months left in which to save the euro. He presumes that there is enough reason left among 375 million souls for a consensus to form around that cause. Mr Soros has an understanding of the hellish alternatives. I only admire his optimism.

Among the people who shout at telephones for a living, three months is regarded as generous. Some say the euro could be gone within three weeks if there is a run on Spain's banks, a Greek rebellion and dominoes falling on every side. Decisions are imminent.

These are not sideshows in countries far away of which we know little. No-one living has been through this before. Arguably, no-one has ever seen advanced – please fill in your own jokes – capitalism in such travails. A tripartite monetary system founded on a dodgy dollar becomes like any three-legged stool when you kick a leg away. It falls over.

America is no longer the world's banker. China has not, perhaps, told the whole truth about the nature or depth of its economic miracle. Capital is in flight across the planet. Capital's problem is that there is only one planet to hide within. The third leg of the stool, say all the people who shout at phones, is rotten. What must Europe do?

I once saw Eddie Izzard do a stand-up show in San Francisco. At one point he said: "Yeah. I'm from Europe ... Where the history comes from ..."

You can tangle with the word, if it is a word, eurocentric. You can talk about imperial presumption. You can worry about the Germans, on your small and damp island. You can boast, after a weekend of royal fun, of the rebirth of the piddling nation state. You would still have to answer a question: what becomes of the world if the euro goes down?

Take our cross-dressing stand-up. He meant to suggest, I think, that the cultural weight of history is greater than money markets can measure. Being less than half as bright, I would add only that if you subtract Europe – and Europe's belief in Europe – the world becomes strange. Would the planet be better off with a Sino-American argument?

I once had fun with a distinguished American literary academic. He wanted to talk about the Great American Novel. I wanted to ask why my American friends were so hung up on fictive prizes. "I'll trade you my Dickens, Flaubert and Tolstoy. What have you got? Some story about a big fish?"

To say that this sort of stuff doesn't matter is to misunderstand, as Chicago Boys always do, how an economy works. Adam Smith never made that mistake. An economic crisis is always the story of those living the crisis. In the present case, the victims are the citizens of Europe who dispute the terms of the argument. What happens if they lose?

You get turbo-capitalism, Mitt Romney fashion, or state functionaries in bad Chinese suits. That's your planet. Neither party cares, much, about your environment, or starving African infants, or the sovereign rights of nations. That's what "Europe" does; that's what "Brussels" dreams up. If you have heard Beijing or Washington fret lately over the rights of small nations, let me know.

When a consensus is established, disagree. It has now become commonplace to say that the euro was a bad idea because of interest rates, productivity, the lack of cross-border transfer mechanisms, the Germans, debt and swarthy folk getting above themselves. I write this morning to say that the euro was a work of genius for precisely those reasons, and that by saving it we might do the human race a favour. No big deal, then.

Everyone understands the mechanism, and everyone grasps the problem. To fund Europe's liabilities, Germany's bond market credibility would have to come into play. German notions of political probity would then have to become general. To induce Mr Soros and his friends to quit the game there would have to be a United States of Europe. In that entity, the biggest state would want some say.

Politically, this sounds, because it is, impossible. The BBC would have us on penalty shoot-outs, by way of Dunkirk, before you know it. Half of France would take to the maquis. A German Europe is – for a few obvious reasons – a political impossibility. A European bond issue without the Germans is, meanwhile, a fantasy. It won't happen.

There is another country. In time, there might be a couple of other countries. Beyond, there is a world that might yet need to understand why George Marshall's Plan for European Recovery was born. If Britain does not begin to aid the effort to save the eurozone, Britain will be the poorer. Do the sums. Amid an emergency that will decide the nature of the world for a century, we are fiddling with pasty taxes.

You can't only blame Tories. Scotland's Nationalists have taken to the hills where the euro is concerned. Not one of them is brave enough to say that pulling a continent together after the bloodiest wars yet conceived was noble, right and good for a lot of people. Personally, I call that a list worth defending.

I say something else. No-one has asked this question, to my knowledge. If the euro goes down, what transpires? If won't be the drachma for long. The punt and the escudo and the rest will be novelty items for a season. You might get a Bundesmark Europe, briefly, but the Germans don't generally do business on those annoying trade-weighted terms.

Keep the euro or face the alternative. Should you wish to defend the place "where the history comes from", and put some decency into international politics, and not wish necessarily to exist under the hegemony of Washington or Beijing, remember where you live. Only Mr Soros will lose money.

Commenting & Moderation

We moderate all comments on HeraldScotland on either a pre-moderated or post-moderated basis.
If you're a relatively new user then your comments will be reviewed before publication and if we know you well and trust you then your comments will be subject to moderation only if other users or the moderators believe you've broken the rules

Moderation is undertaken full-time 9am-6pm on weekdays, and on a part-time basis outwith those hours. Please be patient if your posts are not approved instantly.

99522