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The changing Euro

May 17, 2010

With all the emperors, dictators and kings that have marched armies across Europe, only a cursory view of European history will reveal that it is one of upheaval.

As someone who has lived in and traveled across UK and the Continent, I always marveled that countries so integrated and so much at peace were at each others throats as recently as when my own father was a boy in Italy.

And now Europe is in upheavals again, as aptly summarized by financial analyst John Maudlin (hat tip Big Picture.) I won’t go into his argument in detail but I will sum up that he sees no good options for Europe, and he’s probably right. In fact, to get some accord on how to deal with the Greek tragedy, Sarkozy apparently raised the specter of the most unpleasant option of all:

“French President Nicolas Sarkozy threatened to pull out of the euro unless German Chancellor Angela Merkel agreed to back the European Union bailout plan at a summit last week in Brussels, El Pais newspaper said.

Sarko’s argument was a compelling one:

” ‘If at this point, given how it’s falling, Europe isn’t capable of making a united response, then there is no point to the euro,’ the newspaper quoted the French President as saying.

So bottom line, if Europe can’t sort out its own problems, what’s the point of the Euro? Well, good point!

Maudlin goes on to point out that the world is better with a united Europe and I’ve pointed out that others seem to think the Euro is a good idea. The US should want a strong Euro because it takes some pressure off the greenback (heck, I may be more on the fringe here but I think the US should actively try to get the dollar off of its reserve currency status… I think such a move will be beneficial to the US in the long run, but that is another post.)

So let’s assume the Euro is a good idea, will it last? My answer is yes, but taking a cue from European history, it doesn’t mean it will last as is. Over the past few hundreds of years, Europe’s internal borders have changed countless times. Can the same be said about the Euro’s membership, that its internal borders may shift?

(I actually mean membership here, I’m trying to push parallel structure in my writing)

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