The Euro is a 'one size fits none' currency..

A comment by the former head of the German CBI equivalent interviewed on WatO today is, I think worth repeating. Hans Olaf Henkel MEP. Link here, start at 38.45 in. He was talking about the Greek crisis.

'They have been able to buy again More time in order to escape the necessity...{to pay} 

Mark Mardell: 'What do you think about that?'

Well ha ha, if I was the  Greek Government I would behave exactly like that because since the Chancellor Frau Merkel has made it clear that Greece should stay in the currency union what is the incentive for the Greek Government to do something else? I don't think  they need to do much they just need to sit and wait and in the end Frau Merkel and Monsieur Holland will give in. That is my prediction

'Do you think they're wrong?

'Yes. They are absolutely wrong. They should have not let Greece off the hook in May 2010 and when they did this they destroyed the firewall between German taxpayers and politicians in the south of Europe. They are now condemned to save the Euro at all cost. And there is only one way out - let the Greeks go. And my party position is very clear; we are willing to forgive the debts which have been accumulated but only under one condition that Greece leaves the Currency Union. That is the new government and Athens has a face saving way out because they can claim to their constituencies they have got something and for the German finance minister it really means nothing. Because every economist in Europe knows that money is gone anyway.

MM: 'That's what you want but your political judgement seems to be it won't happen because the government is too soft.

'Yes I always try to differentiate between things I would like and the things which I see happening. And I must say as long as Frau Merkel will be in charge of the German Government she will not let the Greeks leave the currency union.  The Euro is much too strong for Greece and it is much too weak for Germany. And as the ex president of German industries I tell you I am quite appalled by the fact that it is so easy for German industry to export their goods on the basis of an undervalued Euro which makes it on the other hand very difficult for the Spanish, the  French, the Italians the Portuguese and the Greeks to export their goods. This has become blatantly apparent. This is a one size fits none currency.'

The absolute crux of why the Euro will never be good for Europe. It just traps everywhere that isn't Germany in a currency that makes exports impossible and disallows them from devaluing their currency in order to re-balance their economies and become competitive again on the world stage.

And the pain that this is causing throughout Europe but especially in the PIGS is becoming intolerable. It is causing an increase in violence and potential conflict and youth unemployment rates of around 50%. Interesting - perhaps critical - is his inclusion of France in that equation. France will ultimately be the key and just as it has been the biggest beneficiary of the EU (to keep it quiet and 'onside' with the CAP subsidising it's medieval subsistence farming economy) it will also, ultimately, be the biggest loser. I love France by the way - this is not jingoistic in any way - but they know they have a massive economic problem and in my view the sooner this boil is lanced, the sooner France will be able to stand on its own two feet again as a nation. There will be significant pain along the way though.

Thanks for reading.