Tags: Euro | Lafontaine | eurozone | PMI

Euro Founder Now Says the Currency Should Be Broken Up

By John Morgan   |   Monday, 06 May 2013 10:51 AM

The German finance minister who was a leading voice in launching the euro now says it was a big mistake, and the currency should be scrapped before it leads to disaster.

Oskar Lafontaine said the results of current pan-European efforts to support the euro are threatening democratic government policies on the continent.

“Hopes that the creation of the euro would force rational economic behavior on all sides were in vain,” he said, according to The Telegraph.

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The policy of forcing Spain, Portugal and Greece to undergo internal devaluations has been a “catastrophe,” according to remarks he made on the parliamentary website of Germany’s Left Party Lafontaine, The Telegraph reported.

“The economic situation is worsening from month to month, and unemployment has reached a level that puts democratic structures ever more in debt.”

Lafontaine was an advocate of a united Europe and the “end of the nation” state when the euro was launched in 1999. He later left the Social Democrats to found the Left Party.

He predicted the European countries now in the most financial turmoil would soon unite to force a change in crisis policy at Germany’s expense, The Telegraph said.

“The Germans have not yet realized that southern Europe, including France, will be forced by their current misery to fight back against Germany hegemony sooner or later,” he explained, claiming Germany’s wage squeeze to gain export share is causing much of the crisis.

Lafontaine’s remarks coincided with weekend remarks from French Finance Minister Pierre Moscovici that underscored fresh weakening of the fiscal front within the European community. Moscovici said that “austerity is finished” as an official European policy.

His comments followed a European Commission deal to give France and Spain two more years to meet deficit targets, despite the reservations of some German officials.

The Markit Eurozone Composite Purchasing Managers' Index (PMI) shows the eurozone may be sinking deeper into recession, Reuters reported. Composite PMI, which gauges activity across thousands of companies, was 46.9 for April, and has now been below the benchmark 50 level that separates growth from contraction for over a year

The PMI for Germany revealed it is now suffering a contraction in business activity that has long dogged France, Italy and Spain, according to Reuters.

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