More generally, the collapse of the European economy is caused by too much economic “liberalism”, while the rest of the world does the opposite, by providing strategic state help. This dichotomy happens within the Euro zone itself, where Germany found a trick to provide stealthy government help.
Abstract: The collapse of industrial production in France, Italy and Spain, while it soared in Germany, under the Euro regime, has a simple technical explanation. Using bankrupt banks, Germany subsidizes massively its industry. However, under vicious European Union rules, Germany insists that countries other than Germany do not get any STATE subsidies… while Germany enjoys them quietly. This cannot be allowed to go on.
The existence of a, de facto, common currency is nothing new in Europe: it was practiced during most of the last 2,000 years. It is a drastic economic advantage. Thus, so it should be with the Euro. However the present unfair and imbalanced German practice is unsustainable. The solution is for the rest of Europe to get state help, just as Germany, Japan, China, the USA and the UK (massive quantitative easing and other interventions), and also India, do: extend state subsidies to non-German Euro nations. (Either by creating banks similar to the bankrupt state supported German banks, as used to exist in France, or by some other subsidies…)
French presidential elections are 3 weeks away. Marine Le Pen wants to leave the Euro, and the European Union (however, she also intent to change to a Swiss-like system of plebiscites, so she would submit any big change to these). Marine Le Pen was received both by Putin and the presidents of Chad and Lebanon.
Many opinion leaders have clamored for years to destroy the Euro, such as the well-known establishment propagandist Paul Krugman. Except for howling together, the reasoning is not obvious. The anti-Europeans’ basic argument is that various economies need to devalue their currencies at different rates, because otherwise they won’t change.
On this site Picard 578 and Lovell said:”The problem of the Euro is its existence”. I disagree: common currencies are very advantageous, but this one has a poisonous hook inside.
Past Currency Problems: Rome, China, Europe:
It is true that the gigantic Roman empire ran into a currency problem, characterized superficially both by dearth of fiduciary currency and inflation. One reason was the weakening of the application of Roman Civil law by centuries of fascism. Another is that, like China, the Romans did not have enough precious metals (anymore: they had exhausted the mines).
The Franks solved both problems: they yanked law enforcement from the Roman Catholic bishops, re-establishing good old fashion cruel punishments for malefactors: currency counterfeiters were slowly boiled to death, alive, in special long cages where they slowly cooking twitching bodies could contribute to leaving a lasting impression to the obtuse masses.
The other way the Franks solved the problem of precious metals was by conquering Eastern Europe, something the Romans (except for imperators Caesar and Trajan) had not even envisioned. There were abundant silver mines in Eastern Europe. (The Chinese solved, sort of, their currency problem with paper currency. That lasted seven centuries, until collapse of the Yuans under hyperinflation. The Ming and Manchus got Bolivian silver from Bolivia, through the Philippines held Spain.
Common European Currencies Never A Problem:
When there is no common currency, there is no common trade..Clearly common currency collapse contributed to the fall of the Rome of the Third and Fifth centuries, and the Roman Catholic bishop government of around 400 CE. The same holds for the Yuan. The Chinese used cumbersome copper as precious metal, or potentially worthless paper. When people cheated with currency in 400 CE Rome, the local bishop from the local plutocratic family, would admonish them. Six centuries later, the Franks had them bathe in boiling water, wine or oil.
The Franks did re-establish the Roman currency, both by ferocious enforcement of the law, and by making the coins themselves more valuable (by augmenting their precious metal content).
From 650 CE to 1000 CE, temperature increases of the Middle Age Warming and the re-establishment of a stronger state (very strong in 800 CE, when the Roman empire was officially “renovated”, much more fragmented later in West Francia) brought more than a doubling of the population of Europe (from 18.5 million to 39 million). In spite of all the disturbances and massacres caused by invasions of rabid, voracious, pitiless Saracens, Vikings and Magyars.
Although West Francia (present day occidental two-thirds of France) was cut up in 60 local states (some duchies, some counties, some free cities, some church states), after the death of emperor Charles the Bald, counterfeiters were boiled all over, and thus (roughly) the same currency worked in northern Germany, Rome, or Austria.
I insist on this for good reason: the government of Roman bishops of 400 CE had decided, as the good Christians they were, not to apply the death penalty anymore for highwaymen. Result: the currency became extremely fake, and the road extremely unsafe. Too much goodness leads to too much crime for civilization to keep on operating. This is what the government of bishops of 400 CE proved (at the same time, realism forced the bishops to agree to let the Franks receive military control of three Roman provinces, including Gallia and Germania).
Charlemagne was Imperator Romanorum (Emperor of the Romans, approved by Constantinople, Oriental Rome). The Franks viewed Rome as “renovated”, but the fact is Roman civil law, Roman roads, and Roman currency had survived the collapse of the Roman state in the Fifth century (when it was progressively replaced by the imperators/elected kings of the Franks). The Belgian historian Pirenne suggested that it is the rise of the Muslim Caliphate which really caused a problem. That’s pretty much obvious as Islam was explicitly contrived to destroy the Greco-Roman state, promptly conquered more than half of it, by the sword, in 80 years, and then embargoed the rest!
In any case, the pure gold Roman Solidus was still used in 1000 CE, and the basic coin was still the Denarius (pfennig, penny, French “denier”). England, not yet part of the empire in 800 CE was still part of the currency system. Although England had 70 mints then, the English penny paid two-third of one basic worker’s day, same as on the other side of the Channel. As it took months to travel across Europe, the fact that there were many local mints does not mean that the (“Renovated”) Roman currency could not be viewed as global.
Charlemagne was the first Roman emperor who was officially sacred by the Pope. Hence the notion of “Holy” Roman empire, which surface several centuries later. By 1500, a common central European (Holy Roman-German currency) appeared: the Thaler (hence the word “Dollar”). The Thaler was used for nearly four centuries… until 1873, when Bismarck’s imperial maneuvering eradicated it…)
The Euro and EU intervention in economy is well beyond just having a common currency. For example it prevents to re-establish order in Africa, because France does that, France then gets punished for it in diverse ways, including by having not enough money for the rest of her economy. The proper usage would be to subtract France/Europe defense from deficit computations and, more generally, spending.
In particular money and plotting should have been spent as needed to establish a proper democracy and state backing it up, in Libya. Same for all subsahelian countries (Mali, Chad, etc.)
Germany Banking Subsidy Trick:
Thousands of medium German banks are crucial to finance the “middleling” German companies (of the “Mittelstand”) which produce crucial equipment for larger companies (say specialized brakes for fancy cars, or specialized LED lights used in characteristic German cars like my own). Such companies can then evolve and produce in a very protected, stable environment, favorable to apprenticeship.
It is a good system.
Too bad other countries are not allowed to have one too. To have one, other countries would have to massively invest, in full, enormous catastrophic deficit mode, before then going-on in a chronic deficit mode (as Germany presently does).
Weirdly, I am the only one to talk about this.
By the way, China’s local communities (sometimes cities with 25 million people…) do the same as Germany: massive deficit spending to sustain massive local industrialization. Right, the Chinese system is suffering from terminal debt. However, the fact is Chinese industry is thriving and expanding worldwide (Example: a Chinese drone company has a contract for taxi drones in Dubai, to operate in a few months…).
Meanwhile, French industry has collapsed, most governmental help being outlawed by European institutions (which did not discover the German trick therein described…)
Thus General Electric, saved by 60 billion dollars from Obama, was able to swallow its French competitor, with Brussels’ benediction… That was helped by US “Justice” condemning said French competitor to a billion dollar fine, for… alleged corruption in Indonesia… The European Union has prevented its actors to act dirty. Except for those, like Germany, which play dirty.
Goodness is always last to play dirty, by definition. However, if goodness never plays dirty in the end, goodness will be devoured by badness, malefaction. Voltaire recommended that we “ought to crush infamy”. That means not turning a blind eye towards those who exploit the rest of the world, just because we are good, and aspire to goodness. Now more than ever.