Disorder in the orderly escape from Euro

“The ultimate conspiracy
Informs me there are none
Things are what they seem to be
The earth goes round the sun!”
From The Fool’s Prayerbook
(Ed. Bachchoo)

Lord Wolfson, chief executive of NEXT, the worldwide clothing store chain, is offering a prize of £250,000 to the person who can come up with a solution to the economic problems that beset the eurozone.

His announcement says, “This prize aims to ensure that high-quality economic thought is given to how the euro might be restructured into more stable currencies.”
My message to Lord Wolfson is that he has come to the right place. I can lend some very high-quality thought to the matter but feel compelled to start by telling the noble lord, without any canine implications, that he is barking up the wrong tree.
I know through high-quality reasoning that Lord Wolfson has been persuaded or panicked into this generous offer by the immediate plight of the Greek economy and the projected plight of Ireland, Spain, Portugal and even Italy.
Very high-pedigree brains (quality is another matter!) in the governments and banks of Germany, the IMF, France, Wall Street and the British Chancellor’s think tanks among others are wrestling with the problem.
They haven’t quite formulated the question in the way Lord Wolfson has. The questions they venture to answer are related to his but don’t begin with seeking a break up of the euro union. He presumably wants Greece and others to detach themselves without major disturbance to the NEXT clothing chain and other businesses whose chief executives may indeed be friends and boardroom mates of M’Lud.
I confess to sharing the view that he is asking the wrong question. It’s as though your little daughter asks, “Why can’t I have another chocolate when mummy seems to be raiding the box?” The question one would rather she asked is, “If I am given a tight slap, will I shut up and look the other way and stop bothering you?”
So with Lord Wolf this prize, which he will feel compelled to transfer to my rather penurious account when he reads the rest of this column. He has asked for an answer in 25,000 words. My argument can be summarised in the space of the next 500.
Let’s start with Greece. If it decides to withdraw from the euro and go back to the drachma at a much lower exchange rate, compete in export markets and get rich, it will have to pass laws to get there. This will take weeks and allow depositors to access holes in the wall or their local branches, pull their euros out and hide them under their mattresses.
The banks will float, not like companies on the stock exchange, but like dead whales in the water. They’ll go belly-up. The other world banks that have lent them money will go bust too.
Then the people in Ireland, Spain and the cautious ones in Scotland will also go to their banks and holes in the wall and pull out all their cash and stuff it under their mattresses. World banking will collapse and those who weren’t fast enough at withdrawing their money will be left hindmost, prey to the devils of penury. Businesses, which depend on the lumpiness of capital gathered in banks, will crumble.
There would follow some action by Europeans on the lines of the storming of the Bastille, the assault by Bolsheviks on the Winter Palace, Cromwell’s formation of a Model army, a Long March from the heights of the Alps to the cities of the plains or some combined variation of all the above.
If Germany were to leave the euro and declare a return to the Deutschmark leaving the remaining nations to stew in their own national soups, this German currency would be so overvalued as against the rest that Germany would have to find a way to turn BMWs into bratwurst. More expensive than bailing out Greece and the rest by giving them billions of euros in long or never-never-term loans.
Before proffering my solution and claiming my quarter-million pounds sterling (not euros, please note!) I would like to ask M’Lud a question. Does his clothes chain NEXT make its excellent garments in London, New York, Berlin or Paris perhaps? Or are they made in, just for instance, China, India, Hungary or places where the workforce works for wages that European Unions would not countenance? One doesn’t need to ask Keats “What’s a Grecian earn?” The answer is certainly more than the worker in Bengaluru or Shanghai.
Is it then true that a country like the UK and vast sections of world capitalism have “outsourced” their manufacturing production, from balloons to ballistics, to those growing or “tiger” economies and have more and more relied on service industries and “the financial sector?” It is!
What the hell is this financial sector? It’s people’s money gathered together in banks and lent out in ever more desperate and fantastical constructions of what they call “products” (what a linguistic cheat!) but which are really castles in the air. Crumblable!
And so to the solution — not of how to break up the euro but how to strengthen it. This has to be first a political solution and then an economic one: The highest representatives of all the European countries ought to call a supreme conference and sign a treaty to form a United States of Europe (USE). Official language: Chinese.
The USE then adopts the slogan, “China’s Chairman is Our Chairman.” A delegation to Beijing would bribe Chinese “experts” to come over to Europe with containers full of yen and set up industries on favourable sites to make everything from balloons to ballistics.
Commissars would instruct the Europe’s police, armed forces and secret services on how to hold workers wages down to the prevalent levels in Canton, Wuhan and Chongquing. Oh Prosperity! Oh Laxmi!
(Please send prize money to Account no. *********** Bank of Ali Baba and Associates, Geneva, Switzerland [and please don’t announce it!])