It has been sickening during the last week to listen to the Americans and British talking about the future of the Euro. The southern states of Europe have been subjected to veiled racist abuse, and European leaders admonished by politicians who lack the courage to do anything to reform their own back yards – their corrupted banking systems that created this mess in the first place.
Britain is playing a nasty little role in the present euro debacle. It was the British failure to regulate banks, many of which were bought up by the relatively excellent Spanish banking system, that introduced financial collapse into Europe. British Conservatives have spent the last fortnight boasting that because they are “trusted”, because their “austerity measures” inspire “confidence” they are able to borrow money at preferential rates.
What exactly does this mean? It means that Britain can borrow at 3% and charge Greece 7% for a loan. And Portugal. And Italy. And Spain. No wonder the British command international respect. This usury is cloaked and presented by the toadying BBC as “bail out”.
Britain flirted with the ERM, wasn’t man enough to stay in and subsequently steered clear of the euro under Gordon “when the time is right” Brown. If there was any lack of leadership in Europe was to allow Britain to bully its way to a position where it could free trade with Europe while retaining its alien currency. Free wheeling rights without responsibility.
How has Britain used this privilege? Over the last ten years it has quietly devalued sterling relative to the euro. When my wife and I bought our house in Spain six years ago, you could buy a euro for sixty-eight British pence. Today, six years later, a euro will cost you eighty-six pence, sometimes ninety pence.
What does this mean? Now that sterling has fallen by thirty per cent, British goods have effectively got 30% cheaper when sold to Europe and European goods – Greek and Spanish goods for example are 30% dearer to buy in Britain. Effectively Britain is undercutting its European competitors in spite of being part of a free trade community by using a slowly devaluing currency. Nobody on radio 4 – which is staffed by British patriots – mentions this fact when questioning euro sceptics, or even europhiles.
So what’s my solution to the euro crisis? Should Greece leave the euro? Should everyone except Germany and Holland leave it? On the contrary, Europeans should stand solid and together for the first time in their history.
I propose a devaluation of the euro at least 30% across the board. This would slam the trade door shut in the faces of the British, the Americans and the Japanese, whose goods would increase in price overnight by at least 30%. Britain might wish it were part of the euro, Barack “we lead from behind” Obama might complain, but this is a crisis – there is no room for sentiment. Everything they produce could be produced by the Germans Dutch and the industrialised north of the euro zone at no increase in price to euro customers. Having wiped out American and British competition, German and other industries would take an extra growth leap forward, creating employment possibilities and extra funds to support the weaker south. Within the Euro boundary, all prices will remain the same.
Brits as old as I am will remember Harold Wilson’s statement when he devalued the British pound during the 1960′s, that “The pound in your pocket” would not be affected. He was lying of course, but then he was the Prime Minister of a little country totally dependent on imports. Europe on the other hand is the one of the greatest, potentially the greatest economic community the world has ever known. It can handle itself on its own.
But what about the bankers? How will they get their money back? Well, they lent in euros so they’ll get euros back. And those euros will hold their value if traded within the euro block. If any banker tries to sell them, or trade outside the euro block, they will lose an awful lot of money.
This solution is the obvious first step out of the crisis. It is simple and just, which is why no one will even consider it.