11:58 – The Euro farce continues to degenerate. All parties are desperately searching for a solution, except Germany and the other conservative northern tier countries, which know there is no solution. The Euro is and always has been fundamentally broken. Every competent economist knew that even before the Euro was introduced. Even I knew that before the Euro was introduced.
The fundamental problem is that it is impossible to have a monetary union without a fiscal union, and Germany, the Netherlands and Finland would be insane to agree to such a union, particularly now. As Milton Freidman predicted back around the time the Euro was adopted, it would collapse at the first serious economic crisis. And that’s exactly what’s happening now. Also, as I and others predicted, the ridiculously expensive social programs in Europe would bankrupt them, and that too is coming to pass.
Simply put, there is no solution to the Euro problem, or at least there is no solution that is acceptable to all parties involved. Greece, Portugal, Ireland, Spain, Italy, and other bankrupt EU nations are now clammering that there’s no alternative to a fiscal union, starting with expansion of the EU bailout fund from its current €440 billion to something in the €3 trillion to €4 trillion range and followed by the introduction of Euro bonds, which are basically blank checks that allow the bankrupt EU nations to borrow as much as they wish and have Germany pay the bills. The problem is, Germany is no more likely to agree to those measures than I am to cosign a mortgage loan for a homeless drug addict. At least I’d have a better chance of being repaid than Germany would.
The only possible solution is one that European politicians are not (yet) ready to speak of. Germany and the other rich northern nations need to leave the Euro and go back on their own currencies. That leaves the Euro bankrupt, along with all of the countries that would still be using it, including France and Belgium. Holders of Euro-denominated bonds from those bankrupt countries would lose essentially everything. They’d be lucky to get one cent on the Euro. But eventually the markets would adjust. Greece, Portugal, et al. would not be able to borrow any money, and would return to being very poor nations, which they’ve actually been all along.
I’m doing laundry, and I just went into my lab to collect towels. It occurs to me that one of my unusual personality quirks is how I handle used towels, paper towels, surgical gloves, disposable pipettes, and so on as I’m working. I toss them on the floor, to be collected and washed or disposed of later. Same thing on the very rare occasions when I contaminate a set of splash goggles. Onto the floor they go, and I pull a new set off the shelf.
I actually remember when I started doing this, as a teenager working in my darkroom. I dried my hands with a towel, which turned out to be contaminated with a processing chemical. I then touched a print, which was ruined. From that day forward, as soon as something becomes contaminated, onto the floor it goes. That way, I know that an item on a counter must be uncontaminated, or it would be on the floor. So, there is method in my madness.