Financial Times
September 22, 2011
It has become something of a mantra among European leaders that we can be sure they will save the euro because they have to save the European Union. You can see where they are coming from. European integration would struggle to survive the demise of its flagship project.
The assertion, however, misses something rather important about the causality. The reason the single currency is in such terrible trouble is that governments across Europe have failed to persuade electorates that the EU itself is worth saving.
I have given up counting the erudite commentaries I have read about the future of monetary union – or the absence of one. Some say that the crisis could be resolved at a stroke by the issue of eurozone bonds. Tim Geithner, the US Treasury secretary, has come up with a wheeze that would allow governments to leverage their financial firepower.
Others insist the iron laws of economics demand that Greece be thrown overboard. It’s called controlled default. I am not sure French and German bankers are quite so sanguine about the prospect. My friends in Brussels expect (or rather hope for) a leap to political union. Prophets of a sceptical bent say all this is futile because they knew all along the single currency was doomed.
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