In defence of the euro

Greece isn't the "morality tale" the Eurosceptics think it is.

Is the crisis in Greece the first nail in the coffin of the euro? Critics on both the left (see here and here) and the right (see here and here) have used the crisis as an opportunity to take pot shots at the European single currency.

But Dan Roberts, the Guardian's head of business, issues a strong rebuttal today:

So far, the Greek drama has been music to the ears of Eurosceptics. Cries of "I told you so" echo from right and left as the recession exposes the predicted weakness of a single currency system that does not let overly indebted countries inflate their way out of trouble by devaluing. To some, it is a morality tale: cast with Greeks who fib about their finances, free riders in Ireland, and cocky Iberian property speculators. To others, it is a local version of the trade imbalances that wrecked the global economy, with Germany playing the role of China.

It is true the single currency both contributed to the credit bubble and made it harder to let the air out gently. Bank of England governor Mervyn King was positively smug yesterday when asked about the travails of the eurozone, revelling in a rare moment of schadenfreude as the plunging pound finally breathes some life into British manufacturing.

Yet just as the prospect of a Greek bailout has turned the tables on investors who were speculating on its demise (a short squeeze, in the parlance), the political tide may yet turn against the sceptics today if Europe can hold firm.

Supporters of the single currency should be able to point to a Greek rescue as a sign of its strength as well as weakness. Unlike Iceland, which is desperate to join the euro, or perhaps Britain (if the predatory currency speculators one day turn their attention there again), eurozone member states will demonstrate their unwillingness to be picked off one by one.

This has always been one of the main arguments advanced by the pro-Europeans: integration (be it political or economic) does not entail the loss of "sovereignty" but, instead, the sharing, pooling and extending of sovereignty at a transnational level.

In a world where speculators bet against -- and can bring down -- national governments, the euro, for all its faults, offers a potential bulwark.

As Roberts continues:

In exchange, Europe's politicians will have to complete the project they began 18 years ago in Maastricht. Monetary union (a single currency and interest rate policy) will now need to be followed by much greater fiscal union. No longer will German taxpayers tolerate fiscal free-riders, but no longer will Berlin and Paris be able to ignore the plight of the periphery.

Whether Britain is ready for this is a quite separate question, but sceptics might want to note that the abusive acronym PIGS -- coined to describe southern European laggards Portugal, Italy, Greece and Spain -- has recently been amended by wags in the City to STUPID (Spain, Turkey, United Kingdom, Portugal, Italy and Dubai).

Relying on a fall in sterling to sort out the structural woes of British industry also looks brave. Southern European economies were no healthier when they were able to postpone change by simply devaluing their way out of trouble.

He concludes:

The effect of speculation on the eurozone crisis is easy to exaggerate, but it is real. More transparency and rules would help, but the best answer to those who try to make money from the misery of others is to show them that Europe's taxpayers stand united against them. There is a reason why speculative runs start with the weakest first.

Even in the short term, I'd still rather be in Athens than Reykjavík.

Hear, hear!

Mehdi Hasan is a contributing writer for the New Statesman and the co-author of Ed: The Milibands and the Making of a Labour Leader. He was the New Statesman's senior editor (politics) from 2009-12.

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Quiz: Can you identify fake news?

The furore around "fake" news shows no sign of abating. Can you spot what's real and what's not?

Hillary Clinton has spoken out today to warn about the fake news epidemic sweeping the world. Clinton went as far as to say that "lives are at risk" from fake news, the day after Pope Francis compared reading fake news to eating poop. (Side note: with real news like that, who needs the fake stuff?)

The sweeping distrust in fake news has caused some confusion, however, as many are unsure about how to actually tell the reals and the fakes apart. Short from seeing whether the logo will scratch off and asking the man from the market where he got it from, how can you really identify fake news? Take our test to see whether you have all the answers.

 

 

In all seriousness, many claim that identifying fake news is a simple matter of checking the source and disbelieving anything "too good to be true". Unfortunately, however, fake news outlets post real stories too, and real news outlets often slip up and publish the fakes. Use fact-checking websites like Snopes to really get to the bottom of a story, and always do a quick Google before you share anything. 

Amelia Tait is a technology and digital culture writer at the New Statesman.