Time to bring in an “Olive Euro” or to bring back the Deutsche Mark?

50 Deutsche Mark banknote: image commons.wikimedia.org

As long as there is no economic and fiscal union in Europe, the Euro is going to be plagued by the inherent weaknesses of errant nations. The current economic weakness in Greece, Portugal, Spain and Italy and the political inability – or unwillingness – to deal with the simple financial housekeeping that any competent housewife would handle as a matter of course suggests that the fiscal union will never happen. Non-compliance with the stability rules by nations lead to few sanctions. This in turn leads to the question whether the Euro has any long term future in the absence of fiscal rectitude across all the participating nations.

100 Euro banknote from Germany

100 Euro banknote from Germany

The weakness of the Euro has in fact helped to boost exports from Germany and the relatively strong growth in Germany is mainly export driven. Nevertheless many Germans are beginning to worry about the value of their Euro when this value is being diluted by the “less responsible” nations. Germans are remembering that “German” Euro notes are easily identifiable (as are the notes printed in the different countries). There are calls for the German government to maintain the value of the “German” Euro when the Euro loses value! (German Euro banknotes can be identified by their serial number, which will always start with the letter “X”.) It is already noticeable that money changers in Asia are beginning to check the country of origin of the Euro banknotes they are dealing with. I can imagine their future reluctance to deal with notes having serial numbers beggining with “Y” (which would be a note from Greece). Some are calling for the Euro to be separated into a “Northern Euro” and an “Olive Euro”. It is only a short step to different values appearing unofficially for Euros from different countries.

Der Spiegel reports on the growing calls for the return of the Deutsche Mark:

Surveys show that many Germans are worried about the future of the euro, but the country’s political parties are not taking their fears seriously. The number of grassroots initiatives against the common currency is increasing, and political observers say a Tea Party-style anti-euro movement could do well.

Rolf Hochhuth is campaigning against the euro — and his stage is Germany’s Constitutional Court. “Why should we help rescue the Greeks from their sham bankruptcy?” he asks. “Ever since Odysseus, the world has known that the Greeks are the biggest rascals of all time. How is it even possible — unless it was premeditated — for this highly popular tourist destination to go bankrupt?”In the spring, he joined a group led by Berlin-based professor Markus Kerber that has filed a constitutional complaint against the billions in aid to Greece and the establishment of the European stabilization fund, which was set up in May 2010. Hochhuth wants the deutsche mark back. “I don’t know if this is possible. I only know that Germany lived very well with the mark.”

It’s an opinion that suddenly places this nearly 80-year-old man in a rather unusual position, at least for him: on the side of the majority of Germans.

Unnerved by shaky, debt-ridden countries and bailout packages worth billions, the majority of Germans want the mark back. In a survey conducted in early December by the polling firm Infratest dimap, 57 percent of respondents agreed with the statement that Germany would have been better off keeping the mark than introducing the euro. Germans, it seems, are gripped once again by their historic fear of inflation: According to the Forschungsgruppe Wahlen polling institute, 82 percent of the population is worried about the stability of their currency.

German Chancellor Angela Merkel of the conservative Christian Democratic Union (CDU) faces a dilemma as to how to deal with ordinary Germans’ concerns about the euro. If she takes their fears seriously, she will have to assume a hard-line stance toward countries that are drowning in debt like Greece and Portugal. But if she plays the iron chancellor, she will have no choice but to break with the Europe-friendly traditions of former CDU chancellors like Konrad Adenauer and Helmut Kohl.

Frank Schäffler, a Bundestag member with the FDP, has been endeavoring for some time now to start a Tea Party-style movement within his party…… Since the introduction of the European common currency, Schäffler has counted over 70 violations of the Stability Pact, which limits the annual budget deficits of euro-zone countries to 3 percent of GDP. He has also vehemently criticized the European Central Bank, which has been purchasing government bonds from cash-strapped countries, even though EU rules forbid it from buying debt directly from governments. “We buy everything except animal feed,” said the FDP politician to general applause.

….. Another opponent of the European currency in its current form is Hans-Olaf Henkel, who was for many years the head of Germany’s leading employers’ association, the Federation of German Industries (BDI). “The statement that German industry benefits enormously from the euro is like the Ten Commandments in Germany,” he says. “But Germany was also the world’s second biggest exporter in the days of the deutsche mark. The proportion of euro-zone countries purchasing our exports has even dwindled since the currency’s introduction.”

Henkel is in a hurry. Just in time for the euro crisis, the one-time enthusiastic supporter of the common currency has now written an anti-euro book titled “Rettet unser Geld!” (“Save Our Money!”). Controversial German author Thilo Sarrazin wrote the dust-jacket text. Just as the former Bundesbank board member Sarrazin has capitalized on the immigration debate in Germany, Henkel wants to take advantage of the underlying mood among the population.

Henkel has a mission: He wants to divide the euro. All of the “olive countries” — as Henkel dubs the Greeks, the Italians and the French — should pay in southern euros in the future, he says. The north — in other words, primarily Germany — would pay with the northern euro.

Economists oppose the idea: German exports would become more expensive and German banks would lose billions in southern Europe. But Henkel’s break with the prevailing doctrine has paid off — his book is on the best-seller list. “Naturally a movement calling for a return to the mark would have a chance at the polls,” says the former top manager confidently.

Read the whole article: http://www.spiegel.de/international/germany/0,1518,736680,00.html

Tags: , , , ,

One Response to “Time to bring in an “Olive Euro” or to bring back the Deutsche Mark?”

  1. juhe Says:


    […]Time to bring in an “Olive Euro” or to bring back the Deutsche Mark? « The k2p blog[…]…

Comments are closed.

%d bloggers like this: