The failure of the Euro

by Emmanuel Bouhalakis

It does not take an expert to realize that the common European currency, the Euro, is approaching at a high speed the end of its lifetime. The reason of its total failure is blatant: There can possibly be no currency union unless there is also an economic one. This of course would mean that there would have to be an EU economics minister apart from a central bank, and a direct form of government to coordinate the budgets of each EU country. That prospect is considered unattainable since nationalism is still way too strong in Europe and bureaucracy is everywhere in the EU institutions.

So, due to the enormous liquidity the Euro brought to the EU member states' banks, lending money became an everyday practice and thus the individual economies showed a statistical development which increased every year. Especially in the so called poorer south European countries like Greece, Spain and Portugal, there had been an impressive economic development each year since the introduction of the Euro in 2002.

Sadly, however, this development did not come so much from the increase in exports and scientific innovations and research but rather from a real estate frenzy and a consumerism paranoia which on one hand created thousands of jobs but on the other hand absorbed money which really did not exist in the pockets of the people; it was money borrowed from the European Central Bank and from the richer countries.

With the USA real estate crisis, the "fever" passed on to Europe and suddenly many local European banks found themselves heavily exposed to the so called toxic loans. The rest is now history. Banks went bust, the governments rushed to save them and in this way they had to demolish the welfare state and the rights of workers which had been attained through years of struggle.

This demolition in turn has given rise to nationalism and extremism with no clear skies ahead. Greece has been the first country to pay for its own corrupted and inefficient governments and the price has been tremendously heavy. Although the Greeks did not witness such a huge real estate boom and are among the hardest working and lowest paid in the EU, Germany, the Netherlands and other countries wanted the country to be an example to be avoided by inflicting monumental blows to the already battered welfare state and private sector. 

Such corrective measures which have stepped upon the threshold of enmity, have triggered big social unrest and have planted the seed of ultra-nationalism in a country which has been democratic for years. The very same situation exists in Portugal and threatens to spread to Spain as well.

Unless immediate alleviating measures are taken for the entire suffering EU "block" of countries, the collapse of the Euro and the subsequent break up of the European Union and the return to nationalism will be inevitable. 

If those measures are taken, then the whole Euro project must be put in a wholly new basis with new treaties and agreements between the member states. Otherwise the roots of yet another wave of dictatorships or wars may arise in the European continent, a familiar state of affairs based on very recent history.