A Tale of Two Currencies

The Euro crisis resembles a Shakespearean tragedy: Despite the obvious deficiencies of the monetary union, all alternatives are decidedly worse for Germany.

The German idea of an exit from the Euro is gaining popular support. According to an “Emnid-Institut” poll, 56% of Germans would favor a return to the “Deutsche Mark,” the country’s old currency. The poll was ordered by “Bild,” a populist newspaper that periodically chastens (with bold headlines) politicians for helping out other EU countries in dire straits – hence, some may suspect the poll to be biased. But other prominent voices have also started to come out of the closet and now speak against the Euro. Among them is Wolfgang Reitzle, head of the gas and engineering company Linde, who expressed his worries about staying within the monetary union and about attempts to fix it.

Someone dies and someone survives

Much can be said about the disadvantages of the Euro. In the case of the PIIGS (Portugal, Italy, Ireland, Greece and Spain), they are sufficiently obvious: Forcing the whole continent, with a patchwork of different business cultures and industrial development stages, to work with the same reference interest rate is an economist’s nightmare. The timid Mondrian patchwork of business cultures becomes a Pollock painting of inflation, speculation, real estate bubbles, export records, rising inequality, and continental political jittering. Shakespeare 2.0, if you will, a true drama.