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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Donald Trump vs Barack Obama: How the inauguration speeches compared

We compared the two presidents on trade, foreign affairs and climate change – so you (really, really) don't have to.

After watching Donald Trump's inaugural address, what better way to get rid of the last few dregs of hope than by comparing what he said with Barack Obama's address from 2009? 

Both thanked the previous President, with Trump calling the Obamas "magnificent", and pledged to reform Washington, but the comparison ended there. 

Here is what each of them said: 

On American jobs

Obama:

The state of our economy calls for action, bold and swift.  And we will act, not only to create new jobs, but to lay a new foundation for growth.  We will build the roads and bridges, the electric grids and digital lines that feed our commerce and bind us together.  We'll restore science to its rightful place, and wield technology's wonders to raise health care's quality and lower its cost.  We will harness the sun and the winds and the soil to fuel our cars and run our factories.  And we will transform our schools and colleges and universities to meet the demands of a new age.

Trump:

For many decades we've enriched foreign industry at the expense of American industry, subsidized the armies of other countries while allowing for the very sad depletion of our military.

One by one, the factories shuttered and left our shores with not even a thought about the millions and millions of American workers that were left behind.

Obama had a plan for growth. Trump just blames the rest of the world...

On global warming

Obama:

With old friends and former foes, we'll work tirelessly to lessen the nuclear threat, and roll back the specter of a warming planet.

Trump:

On the Middle East:

Obama:

To the Muslim world, we seek a new way forward, based on mutual interest and mutual respect. To those leaders around the globe who seek to sow conflict, or blame their society's ills on the West, know that your people will judge you on what you can build, not what you destroy. 

Trump:

We will re-enforce old alliances and form new ones and unite the civilized world against radical Islamic terrorism, which we will eradicate completely from the face of the earth.

On “greatness”

Obama:

In reaffirming the greatness of our nation we understand that greatness is never a given. It must be earned.

Trump:

America will start winning again, winning like never before.

 

On trade

Obama:

This is the journey we continue today.  We remain the most prosperous, powerful nation on Earth.  Our workers are no less productive than when this crisis began.  Our minds are no less inventive, our goods and services no less needed than they were last week, or last month, or last year.  Our capacity remains undiminished.  

Trump:

We must protect our borders from the ravages of other countries making our product, stealing our companies and destroying our jobs.

Protection will lead to great prosperity and strength. I will fight for you with every breath in my body, and I will never ever let you down.

Stephanie Boland is digital assistant at the New Statesman. She tweets at @stephanieboland