This Prediction about the Euro Deserves a ‘Nostradamus Award’

Arnulf Baring is a German lawyer who has been “for decades,” as he says on his website, in academia as Professor of contemporary history and political science. He was written a number of books, including one titled “Scheitert Deutschland?” or roughly, “Is Germany Failing?” Published in 1997, it includes a stunningly prescient passage.

This came to my attention via a tweet from Daniel Hannan, UK, who got it from someone else. As the excerpt, handily translated into English, circled around, it made it into Bloomberg.

So in 1997, Baring said this about the euro and more specifically about the wondrous dynamics of the Eurozone:

They will say that we are subsidizing scroungers, lounging in cafés on the Mediterranean beaches. Monetary union, in the end, will result in a gigantic blackmailing operation. When we Germans demand monetary discipline, other countries will blame their financial woes on that same discipline, and by extension, on us. More, they will perceive us as a kind of economic policeman. We risk once again becoming the most hated people in Europe.

“This prediction about the euro, from a German perspective, deserves some kind of Nostradamus award,” Daniel Hannan tweeted.

In December 2012, I wrote an article on this sort of topic, titled Ten Big Fat Lies To Keep The Euro Dream Alive, which included this as the Number 1 lie, issued by the conniving German government, or rather by the governing party at the time, in order to bamboozle reluctant Germans into accepting the euro and everything that came with it:

1999: “Can Germany be held liable for the debts of other countries? A very clear No!” said a multi-colored piece of propaganda issued by the CDU, the party of Helmut Kohl who was Chancellor at the time, and of Angela Merkel who is Chancellor now. It explained: “The Maastricht treaty forbids explicitly that the EU or the other EU Partners are liable for the debts of any Member State.” Sounds like a bad joke today.

But fear not: because of the 3% deficit limit in the Maastricht Treaty, “euro Member States will therefore be able to service their debts over the long term without any problems.” Thus, the big fat euro lies started before bank notes had even been put into circulation.

So, here are the rest of the lies… Ten Big Fat Lies To Keep The Euro Dream Alive

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  14 comments for “This Prediction about the Euro Deserves a ‘Nostradamus Award’

  1. Michael Gorback says:

    “. . . joining the euro would exacerbate recession in some countries, and that some would find themselves “trapped in a burning building with no exits”

    William Hague, MP, 1998

    Bernard Connolly’s exceedingly accurate and depressing analysis in 2008

  2. robert h siddell jr says:

    The EU bosses and TPTB got a racket: They print money and their agents (like John Perkins “Confessions of an Economic Hit Man”) are money pushers (like drug pushers) “Take the easy money and nobody gets hurt”. The politicians throw parties with the money (welfare programs) and everybody lives high on the hog and gets hooked on blood money until the Enforcers and Uncle Guido show up and want their bosses money back. If you can’t pay, then privatize your countries assets or else. In Russia, Vlad Putin in 2003 jumped the shark and threw Lord Rothschild’s agent Mikhail Khodorkovsky in jail and nationalized Yukos (one reason that the US State Dept has been sanctioning Russia). That’s what should be done (ref Iceland).

  3. I call BS:

    Germany cannot repay its own debts, it needs access to loans in order to simply pay interest. These loans are payable by others — not Germans — by the way.

    That the southern Europeans are lazy is ridiculous, the Germans work fewer hours than their counterparts elsewhere in Europe. Germans are employed because Greeks and Spanish are deprived of jobs by the actions of German bankers plus Chinese imports.

    The mercantilists always say their clients (hosts) are parasites when it is the other way around. The mercantile counties are parasites in the center feasting on the periphery. In empires, resources (capital) always flows toward the center.

    Baring lacks perspective, logic or common sense. The problems in Eurolandia are structural: only Norway and Denmark are energy-independent, all the others must pay for their imports (motor fuel) with borrowed euros … trillion€ of borrowed euros leaving the Continent for Saudi Arabia and Iran.

    The EU also has no internal funds transfer regime,

    The EU has no fiscal structure, treasury or executive. There is no ‘United States of Europe’ nor are there any ‘eurobonds’.

    The euro created a captive market for large manufacturers such as … Germany and China. Lets blame that on the lazy, shiftless Greeks …

    (BTW: the Germans are buying property in Greece, maybe to lounge in cafes and on beaches somewhere. )

    Good grief.

    • d says:

      Who does or doesn’t work the most hours is irrelevant.

      greeece is funding its financially untenable socialist systems. with German taxpayers money.

      That is the issue, and it must stop.

      • Ben says:

        A common currency cannot survive in the longterm unless the more competitive transfers subsidies to the less competitive. The less competitive create debt not due to their laziness but due to the inharent monetary rigidity of a common currency. Se Germany either keeps giving the money or lets it go. Greeks don’t want to be Germans- Germans don’t want to be Greek- they can still be friends.
        This is the only not propaganda-driven truth.

      • Cameron says:

        Greek state originally borrowed the money from German and French banks. The money was used to subsidize businesses through low taxes and exemptions and handouts to favored Greek oligarchs. In return, Greek politicians got all the perks and tips that made them wealthy too.
        So through the bailout programs, foreign creditors were more or less repaid in full, with the debt burden shifted onto the books of the Greek government, the Euro institutions and the IMF – in other words, taxpayers.

    • Wolf Richter says:

      Steve, I think you should re-read the quote to get the cynicism of it. It seems to you missed it.

    • Wolf Richter says:

      BTW, Germany has a nearly balanced budget.

  4. Bob Miller says:

    “We risk once again becoming the most hated people in Europe.” Well, that’s okay with me because I’m getting really tired of having that title tattooed on my forehead. You can bet the guy who said, “The truth will set you free,” wasn’t a banker, attorney or politician.

  5. Donald Last says:

    I do believe, hope, crave that the pernicious effects of this wet-dream called Euro can now be seen by all and that slowly but surely it will be wound down and we get back to sovereign nation States and get back to amity and cooperating amicably on issues of major European concern.

    External devaluations are far, far less destructive than internal devaluations which is what so-called austerity is all about.

    Youth unemployment in Ital, Spain and Portgual hovering between 40%-50% ! what sort of economic policymaking is that?

    • Paul says:

      Debtor countries with a balance of trade deficits have less money to spend and and the insane levels of credit expansion combined with the decoupling of risk of debtor nations that the Euro afforded, allowed their banks to saddle their citizens with enormous amounts of personal debt as well. The result is a stagflation when the credit dries up. People and countries that are servicing high debt levels have very little capacity for consumption and growth. Jobs and marginal businesses are lost that might of survived under prudent economic policies without artificially low borrowing rates.

      This is not economic policy making at all. It is the simple result of excessive and mis-priced credit creation.

      Repaying ‘thin air credit’ created by a data entry with money that has to be earned by production and added value labor is an uphill battle destined to be lost because the credit creation dilutes the money supply via inflation.

      Great for central banks and their partners who control the money spigots but not so great for everyone else.

      Fractional reserve credit ‘money creation’ is the original sin from which most others flow. Why people allow some favored private actors to create money via credit where none existed before is a fundamental question that most simply won’t ask, yet if you or I created money in our basements via counterfeiting, we would end up as wards of the State for 20 years.

      Sorry for the rant but my point was this is not economic policy but legalized fraud that causes jobs, homes and businesses to be lost when the artificial ‘stimulus’ ceases.
      Hard money is a more level playing field.

  6. shimajiro says:

    Things are definitely working in Germany’s favor–maintaining the Greek crisis keeps the Euro undervalued and allows German exports to compete with the Japanese, who are printing money for competitive devaluation purposes. Both are cheats–each uses a different approach.

  7. Paulo says:

    As for Germans buying up Greece assets, etc. Good luck with that one. German tourists will be beaten and mugged, not welcomed. Firesale assets will be vandalized. Where I live on the BC Coast there are places white men do not want to park their cars overnight. These are folks working in logging camps or have driven over to a jumping off point for fishing. Unless their cars are in a locked compound with security, the natives vandalize them big time. Greece would not be any different than any US black neighbourhood. There will be ‘no go’ zones as people become poorer. Fat Germans will not be able to lie peacefully in the Greek sun unless they start playing a different game with the locals.

  8. Julian the Apostate says:

    Both Greece and Germany are caught in the same web. The spider is currently devouring Greece but Germany knows they will provide the last meal to the spider as they dangle trapped and paralyzed, with the other PIIGS loathing them for being last. To quote Grand Moff Tarkin “Charming, to the last.”

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