Endgame for the euro ?

Read : http://www.nakedcapitalism.com/2011/08/marshall-aureback-are-we-approaching-the-endgame-for-the-euro.html.

A disquieting scenario, to say the least. Some excerpts :

"And after the recent joke of a summit between German Chancellor Merkel and French President Nicolas Sarkozy, it appears yet again that Europe’s policy makers have comprehensively blown it. Their persistent reluctance to get ahead of the looming systemic ticking bomb at the heart of the euro project has reached the point where it is likely to doom the euro’s existence. Their repeated “rescue plans” (and equally fatuous statements about new committees and “euro solidarity”) can no longer mask the central problem, which is that countries with very different economies are yoked to the same currency in the absence of a fiscal transfer union which would otherwise facilitate growth, not ongoing economic depression and political turmoil."

"As for Germany, the irony is that divorce from the euro zone will likely not prove to be the panacea that many in the country now think. As the newly reconstituted DM soars to Swiss franc type levels (the DM likely to be seen as a “hard currency” and a credible repository of savings flows), it is likely that German businesses will use their highly valued Deutschmarks to buy European assets on the cheap. Anschluss economics writ large. They will then move a large proportion of their manufacturing to other European countries, to take advantage of the cheaper labour costs, likely resulting in a lower standard of living for the average German worker. It will prove to be a form of fools’ gold for a large proportion of the German electorate, who will soon realize they were sold yet another bill of goods by their politicians.

In any case, there appear to be no happy outcomes here (although as my friend, Tom Ferguson always reminds me, “If you want to have a happy ending, go see a Disney film”). We therefore appear to be entering most dangerous time for Europe since World War II."

Brrrrr ...