The European problem

This is the bottom line of the excellent article by Martin Wolf on the FT.

The project of monetary union confronts a huge challenge. It has no easy way of resolving the Greek crisis. But the bigger issue is that the eurozone will not work as Germany wishes.

The complete article by Martin Wolf can be read here

My view. If you followed my writings, you know that I do not believe in the Europeam project. I lived there for too long to know that the Europeans have so many different genes, work habits, productivity values,....that make the whole European idea impossible.

Martin Wolf hints that the only way for Europe to survive is to become "Germanic". But this is impossible, of course.

A large economic area cannot exist with one currency when the members have so disparate values and productivity. The low productivity countries are bound to be crushed. See what is happening to Greece.

Why should investors put money in Greece where people work less and produce less than Germany?

The outcome is that Greece implodes and Germany flourishes. In the past, countries like Greece, Portugal, Spain, and Italy could defend themselves by devaluing their currency. Now they cannot because they have to live with the Euro.

These are the problems facing Europe. These are the reasons why the European experiment is doomed, as Milton Friedman also believed years ago.

George Dagnino, PhD
Editor, The Peter Dag Portfolio. Since 1977
Ranked Top Market Timer in 2009 and 2010 by Timer Digest

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