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Delors: Euro Was Doomed from the Start

Sunday, 04 Dec 2011 01:11 PM

The euro was doomed from the start, at least in its current form, thanks to planners who sidestepped sensitive issues in its infancy stage, says the one of the currency's own architects.

Failure to deal with imbalances in member nations has brought the currency to the brink of collapse, and today, European policymakers are doing too little too late to fix the problem, says Jacques Delors, the former president of the European Commission.

"The finance ministers did not want to see anything disagreeable which they would be forced to deal with," Delors tells the Telegraph.

It's not feasible to run one currency managed by one central bank over a continent in which each participating country manages its own fiscal affairs independent of the others, Delors says.

Deciding early on to run the eurozone as a single state, economically speaking, would have called for politically unpopular policies such as deciding where tax revenues go, but could have avoided the crisis gripping the continent today.

Today Germany, the motor of the European economy, is working to save the euro by working to prevent debt-ridden southern European nations from defaulting, but the country insists the European Central Bank cannot step in and act as a lender of last resort and bail out problem nations.

Too late, Delors says.

Today Europe is suffering thanks to "a combination of the stubbornness of the Germanic idea of monetary control and the absence of a clear vision from all the other countries."

The "Anglo-Saxons" said that a single central bank and currency without a single state would be inherently unstable, and "they had a point," Delors adds, referring to early U.K. critics.

"Jean Monnet [the founding father of the European Union] used to say that when Europe has a crisis it comes out of the crisis stronger … but there are some, like me, who think that Monnet was being very optimistic. You must be very vigilant to make sure that you do come out of a crisis in a better state. … I am like Gramsci [the Italian Marxist philosopher]: I have pessimism of the intellect, optimism of the will."

To survive, policymakers need to do what they should have done in the first place and design a single economic state to house a single currency.

"The first is that the firemen must put out the fire. The second is that there must be a new architecture. If you have one of these things without the other, the markets will be skeptical."

German Chancellor Angela Merkel is sticking with the argument that greater integration can help the continent but remains firm against allowing the European Central Bank step in via money-printing policies typical of the Federal Reserve, seen by critics as a bailout for debt-ridden southern European counties that allows them to sidestep more politically painful fiscal austerity measures.

"The European Central Bank has a different task from that of the U.S. Fed or the Bank of England," Merkel has said publicly, according to Reuters. "Resolving the sovereign debt crisis is a process, and this process will take years."

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The euro was doomed from the start, at least in its current form, thanks to planners who sidestepped sensitive issues in its infancy stage, says the one of the currency's own architects. Failure to deal with imbalances in member nations has brought the currency to the...
delors,euro,crisis
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2011-11-04
Sunday, 04 Dec 2011 01:11 PM
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