> ZNet Commentary
> Euro-Ambitions January 06, 2002
> By Boris Kagarlitsky
>
> Russian nationalists who tend to dislike everything American are praising
> euro as an alternative. This tells you much about the nature of present day
> Russian nationalism which is not advocating national liberation but rather
> is telling us that being German vassals is better for us than being
> American clients.
Oh come on. Germany is a piddling social democracy, making up less than a third of the EU economy, which had to be dragged kicking and screaming on board the euro project.
> Financial capital in the US was able to exploit the specific advantages of
> the dollar. At the same time a national currency and a world-wide monetary
> unit, the dollar attracted investors; the surplus mass of dollars spread
> throughout the world, lowering the risk of inflation in the US, and in the
> process making the dollar even more attractive.
It didn't happen this way. The US made up 50% of global industrial GDP in 1945, and US capital flowed *out* of the US for 40 years. Foreign investment in the US was negligible until the 1970s.
> For one thing, European companies could not build a financial pyramid since
> they did not have the financial resources to maintain it, and for another,
> it was impossible to expand the indebtedness of companies and the
> population to the same extent as in the US.
Clarification: the EU/East Asia have higher debt levels than the US; it's just that existing debts fall more heavily on the poor, via credit cards, mortgages, etc.
> With the help of administrative and political pressure, inflation was
> lowered simultaneously in all the countries involved. Then it started
> growing with still greater force in those countries which had artificially
> reduced its level for the sake of entering the euro-zone.
Examples please? Inflation in Spain and Italy has remained tame.
> If the European Central Bank chooses to support a high exchange rate, the
> result will be that "backward" countries will find that they are no longer
> competitive (as the unfortunate example of Argentina shows). If, on the
But Italy and Spain aren't Argentina -- they're self-financing economies, not dependent on foreign loans, with lots of indigenous tech, strong bank-industry alliances, and 30 years of integration with other EU countries.
> However, there was not the slightest hope that the newcomers would manage
> to cope in the long term with tasks which even countries that had been
> integrated into the European Union for many years were finding beyond them.
(cough, cough). <http://www.eib.org>. Am I the only Leftie in this universe who bothers to read the EU's websites?
> Everything will end in some kind of bureaucratic, fudged solution that will
> make things worse for everyone. Inflation will be too high for the north
> and too low for the south.
Horrors! Why, that means that governments will have to step in with some big-time Eurokeynesianism, and neolib orthodoxy be damned.
Don't get me wrong, I love Boris and all, but it's not enough to predict gloom and doom. We need a utopian project, capable of repoliticizing the economic sphere, and the euro's advertising campaign slogan -- "The euro, your money" -- ought to be an excellent start. If the euro ought to belong to the people, and not the other way around, all sorts of interesting things become possible...
-- Dennis