It’s becoming increasingly clear that Europe has a problem to which the solution will be world-changing. The way I see it, there are only two real possibilities:
- The ECB does act as lender of last resort, forever changing the political and fiscal nature of Europe; or
- The Euro collapses to some extent and some or all of the Euro countries leave the Euro.
The first is less likely that the second in my view, but also less dramatic in terms of impact. That first option probably results in more European integration, but with wide-ranging implications for international politics and the peripheral Euro countries. Belonging to the Euro would mean something far more substantial than the common currency they share now.
The second option would be the partial undoing of more than two decades of work to unify Europe.
I collected some old Zimbabwean trillion dollar notes as that currency was on its way out. It might be time to do the same for the Euro.
Hopefully this will caution others from ill-conceived ideas of adopting common currencies.