BREXIT, FREXIT, AND DEXIT: THE EU IN DEEP TROUBLE

BREXIT, FREXIT, AND DEXIT: THE EU IN DEEP TROUBLE

May 12, 2016 By Joseph P. Farrell

There's growing pressures in Europe against the whole Brussels regulatory bureaucracy that really runs the so-called "European union." Mr. A.G. shared these articles about the growing opposition not only within France and Britain for an exit of those countries from the EU, the so-called Brexit and Frexit, but growing opposition within Germany to the whole EU as currently constituted. One cannot blame the Germans in a certain sense, for after all, as the economic locomotive of Europe, the Germans are left to pick up the tab for what they regard as the profligacy and prodigality of their "EU partners":

Frexit: Alternative for Germany Sees No Room for France in Ideal Eurozone

Pay attention to this bit of revelation:

Germany cannot exist in monetary union with France and most other European countries because of cultural differences which influence financial policy, Alternative for Germany (AfD) chairman Jorg Meuthen told the Frankfurter Allgemeine Zeitung (FAZ) in an interview on Sunday.

"Nobody wants to throw France out. But France is of course a political problem, for which I have no solution," he said.

...

"We can indeed have a common currency with the Netherlands, Austria, Finland or the Baltic states. They have the same culture of stability as we do."

"But the French have a different culture, not to mention the Italians, Spanish, Portuguese and Greeks. For example, they don’t want any austerity," Meuthen told FAZ.

There's two basic things to note here. First, the party expressing these views, the Alternative for Germany party, is the party that recently drubbed Chancellorin Merkel's Christian Democratic Union in local and state elections in some German states in the recent elections, elections which were seen by many in Europe as a growing rejection by the German electorate of not only of Merkel's laissaez faire refugee policy, but of her austerity measures vis-a-cis other EU members such as Greece. More importantly, you'll not that Herr Meuthen's statements indicate that a common currency is possible for Germany, the Netherlands, Austia, the Baltic states, and Finland.
What Herr meuthen is hearkening back to is the Exchange Rate Mechanism, otherwise known as the "Snake", that was engineered under Chancellor Schmidt and the currencies of the Netherlands, Denmark, Austria, and Luxembourg prior to the emergence of the euro and the modern EU structure. Under the Exchange Rate Mechanism, which I detailed in my book The Third Way, the Dutch guilder, Danish Kroner, Austrian schilling were all coupled or pegged to the German d-mark, and allowed to fluctuate against it within certain margins. When the echange rate fell out of those margins, the German Bundesbank would step in to restore those currencies to those margins. This, in effect, created a common--currency zone in the involved countries, making the d mark an effective reserve currency within that zone.
It was when chancellor Kohl then admitted France into this relationship that things changed, for the franc had to fluctuate within similar margins, which the Bundesbank would be required to enforce. When this arrangement didn't work(as it was inevitably bound to do), the creation of a common currency was the only option, and that was born the euro, and the EU.
Thus, what Herr Meuthen is proposing, if one reads between the lines a bit, is something rather interesting (and herewith my high octane speculation of the day): he appears to be proposing a return to the Exchange Rate Mechanism, with the inclusion of the Baltic States and Finland. In other words, what he appears to be proposing is internal currency zones within the EU, with similar zones, perhaps, of smaller national currencies tied to France. Or to put it succinctly, not a common currency, but rather, a few versions of the Exchange Rate Mechanism, one centered on Germany, another on France.
There's another thing to notice in his remarks, and that's the focus and emphasis on cultures. herr Meuthen is pointed out that there is no unified cultural sense in Europe, and that the euro, as a result, is an unworkable artificiality and abstraction. So where is all of this leading? Well, as already mentioned, I suspect it's leading not back to a restoration of national currencies per se, but perhaps to national currencies tied together in various European "Exchange Rate Mechanisms" until such a time that a unified culture can emerge. And to that end, I've long been suggesting that the refugee crisis was being deliberately created precisely in order to create a sense, among French, Italians, Germans, Austrians, and so on, that they share a common European culture and identity. After all, only in the face of a completely foreign culture, one sharing nothing of the humanistic values of Western Europe, can Europeans recognize that, despite their national cultural differences, they all share something in common that the refugees do not.
Sequere pecunia.
See you on the flip side...