BOOK REVIEW: ‘The End of the Euro’,
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By Sol Sanders
Tuesday, December 13, 2011, The Washington Times
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Johan Van Overtveldt
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THE END OF THE EURO: THE UNEASY FUTURE OF THE EUROPEAN UNION
By Johan van Overtveldt
Agate B2, $24.95, 208 pages
The principle problem with this concise book is, of course, that the whole drama
continues. I write as British Prime Minister David Cameron has just dropped a bomb into
the laps of his 26 European Union partners by refusing to go along with a new treaty
aimed at reinforcing economic integration and solving the crisis of the 17 members’
common currency, the euro. Johan van Overtveldt completed his manuscript, he tells us,
on Aug. 30, but the past is prologue, and he has certainly prepared the present scene.
Bravely, he set out to lay out possible scenarios for further developments. In an attempt
by a very systematic mind (no wonder he hints at prevalent Flemish contempt for the
lofty generalizations of his fellow Belgians and other francophones), he lays out three
possible directions. Following his calling, he journalistically labels them “More of the
same [MOS],” “Throwing out the System [TOS],” and “Rebuilding of the System
MOS means, he says, continuing to throw more credit at the problem, whether emanating
from governments reinforcing failing banks, the International Monetary Fund or the
European Central Bank. A second part of this crisis response was imposing “reforms” on
delinquent creditors such as Greece. But in the end, he argues, MOS is a Ponzi scheme
because deflation enforced on the debt ors means they cannot hope to grow to pay their
debts or even pay the interest on their more -and-more pricey borrowings. The game
would be up, he says, either when the banks fail or austerity brings on political crisis.
TOS suggests individual euro users d ecide their only course is individually to exit the
common currency. Short term, he says, the enforced devaluation of their currencies might
improve their competitive opportunities. But in the end, Mr. van Overtveldt argues, this is
the Argentina route, which several of the southern European debt -ridden countries
resemble economically – one that has not improved the once -prosperous South American
candidate for first world rank. He does argue that Iceland has been as successful as it has
because it was done quickly and with unusual backing of its small and remote population.
ROS, accepting defeat – even the exit of some members – and then rebuilding the
monetary union from scratch is “a Herculean task.” He argues an effective monetary
union requires four conditions: political union, fiscal integration, labor mobility, and
price and wage flexibility. Could the Europea n Monetary Union achieve those conditions
and survive? “Likely no,” Mr. van Overtveldt says.
“Despite the deep crisis,” he concludes, “the European authorities have done hardly
anything really substantial about the fundamentally important issues: rebuilding the
banking sector, restoring the long-term sustainability of public finances, improving the
structure of growth performance of their economies and, most important of all, rebuilding
the institutional framework of the monetary union to make it more durable and efficient.
They are quickly running out of time. As a matter of fact, it is probably already too late.”
Although the author isn’t ready to say it bluntly, he comes to a rath er startling conclusion
– especially at this moment when across the political spectrum in Germany there appears
universal support for attempting to strengthen the EU institutions through new
agreements. He concludes his narrative with a bevy of quotes – he has relied on others’
words for most of his arguments – suggesting that it will be Germany that finally pulls the
plug on the common currency.
He argues that the time is past when Germany’s neighbors – and others further afield –
can rely on German recognition of its culpability in two wars that almost destroyed
“I do not mean to imply that the present generation of German politicians is in any way
unaware of the country’s past,” he writes. “My point is that they seem much less inclined
to let that past dominate Germany’s policies.”
Berlin’s critics point to German business’ profitable courtship of Iran, despite increasing
Western sanctions meant to inhibit its development of weapons of mass destruction. Also
cause for criticism is Berlin’s love affair with Russia’s energy giant Gazprom – even to
the point of cheating its eastern neighbors of transit fees – and its continued refusal to
acknowledge that its export -led incentives are basic to the euro problem. Perhaps, Mr.
van Overtveldt sugarcoats those issues. Although he never quite says it, the author
predicts that it will be German action, with all the power of Europe’s paramount
economy, which will, in the end, spell the death knell for the euro.
Sol Sanders writes the weekly column “Follow the Money” for The Washington Times .