According to a recent study by Stephane Deo and his collegues at UBS, the euro – as it is currently structured – should not exist. It is hard to disagree. The problem is that it does, and just like the legendary Eagles' song "Hotel California" they refer to, it was intentionally set up in such a way that once you get inside there is no way you can leave. There is no checkout procedure.
Reading the UBS report put me in mind of Stanley Kubrick’s cult film, “Dr. Strangelove.” In a key scene the U.S. President, on being informed of the existence of a device (termed the “Doomsday Machine”) which shares notably similar characteristics with the current euro area, is stupefied. On asking those around him -“but how is it possible for something to be triggered automatically, and at the same time impossible to untrigger?” – Peter Sellers, as Dr. Strangelove, replies: “Mr. President, it is not only possible, it is essential. That is the whole idea of this machine, you know.”
Which takes us directly to last week’s European Finance Ministers meeting in Poland. In a setting horribly reminiscent of the Strangelove “War Room,” U.S. Treasury Secretary Timothy Geithner informed the assembled dignitaries that, in a nutshell, Europe was facing catastrophe.
Unruffled by such evidently exaggerated doomsday mongering, the European ministers essentially told Geithner to “mind his own business” – a response which could be roughly translated as “we set this thing up, and we know how to handle it, we don’t need your help, so please buzz off.” more