Eurozone is preparing to jettison the PIIGS: FT

[kerrynorth]

Munchau writing in the FT.

I was confused when Wolfgang Schäuble, German finance minister, proposed a European Monetary Fund. I had not expected this. Was it an attempt to deflect attention from the fast-approaching bail-out of Greece, as one close observer suggested to me? It does not seem plausible. Or perhaps this marks a genuine change in the German position? Had I missed something?


When I read the whole proposal in detail, the fog lifted – or maybe my confusion just reached a higher level. I realised that the EMF is just a smokescreen. The real bullet in his proposal is that countries could leave the eurozone without leaving the European Union. This is not about helping countries in trouble. This is about helping them to get out.


I had previously assumed that Germany had a national interest in preserving the eurozone, as its exporters benefit more than anyone else from a stable exchange rate. Ergo, I thought, Germany – despite the rhetoric – would eventually do whatever it takes to prevent a breakup. It would be the rational thing to do. But I think I was wrong.
FT.com / Columnists / Wolfgang Munchau - Shrink the eurozone, or create a fiscal union

David McWilliams may just be granted his wish!

[Cassandra Syndrome]

If we leave the Euro, I am going to organise on of the greatest benders of all time!

[Schuhart]

If we leave the Euro, I am going to organise on of the greatest benders of all time!

Using what for money? Sure, even Lidl will expect you to pay them three gazillion Irish Pesos for a four pack of prestigious Excelsior lager.

[FlyOver]

If we leave the Euro, I am going to organise on of the greatest benders of all time!

Hehe, I will be the first to come over to celebrate but not sure what I will use to pay with once there

[seabhcan]

This is more of the same nonsense. It isn't possible to either leave the euro or be expelled from it.

[seabhcan]

There is nothing stopping those who favour leaving the euro from unilaterally leaving the euro themselves. They can go to the bank and width draw their savings and post them back to the ECB. Replace them with IOU postit notes.

[evercloserunion]

Completely misleading thread title. There are no plans or preparations to jettison any country, let alone five of them, from the Eurozone.

First of all, the EMF is not law. Schauble is going to have to convince the other Eurozone member states of the plan's merit if it is to ever succeed. Currently France's Christine Lagarde is not to hot on the idea and that will definitely have to be resolved. Then you will need a treaty amendment to establish the EMF and that in itself is no easy task.

Even if the EMF were to be established, chances are that Greece will already have been bailed out by then and it is not certain that PIIS will need bail-outs.

Munchau has a valid point, though I disagree with him (I don't think the EMF is about getting rid of troubled member states, I think it is about forcing troubled member states into stricter compliance with budgetary requirements). But you are representing Munchau's position, particularly in your sensationalist thread title.

[CookieMonster]

This is more of the same nonsense. It isn't possible to either leave the euro or be expelled from it.

You're calling Wolfgang Munchau a liar?

[PrinceMax]

Is there anything to stop us replacing the Euro in Ireland with the Canadian dollar or Norwegian Kronor? I think that would be a good move. 2 good strong currencies, and physically very appealing. The $5 note has a picture of hockey players on it.

[sondagefaux]

The Schäuble proposal as it stands would require a full-blown change in the European treaties – and nobody wants to go down that route right now. Some of his suggestions are unbelievably extreme, for example depriving countries with excessive deficits of their democratic voting rights, or withholding payments under the EU’s cohesion fund. There will be no majority for any of this, let alone the unanimity that such a change would require. Conversely, I doubt Germany would accept the establishment of a formal bail-out mechanism without a simultaneous strengthening of the stability pact.

FT.com / Columnists / Wolfgang Munchau - Shrink the eurozone, or create a fiscal union