COULD THE ECB DESTROY THE EURO?

One of the regular Daily Telegraph columnists, Ambrose Evans-Pritchard, who writes in the business pages, has recently reported on the problems facing the European Union’s artificial currency, the euro, due to the actions of the European Central Bank (ECB).

Under normal circumstances currencies come about after the formation of a single nation, not when a number of diverse and disparate nations decide to commit fiscal suicide and create a single currency for all.

Writing in the Telegraph on Monday 13th July 2009, Mr Evans-Pritchard predicts: “Without a radical change of strategy, the ECB risks pushing the weakest states into a debt-compound spiral that can only end in bond crises and/or the disintegration of Europe's monetary union – whichever comes first.”

He points out the warning from the International Monetary Fund (IMF) which is predicting the eurozone to contract by 4.8 per cent this year. This, he warns, could result in deep damage next year as “Europe remains mired in slump even as the world recovers.”

It seems that Spanish public debt could rise from 36 per cent in 2007 to 90 per cent of GDP by 2011. He warns that “anything above 100 per cent is courting fate” He goes on to report that even German finances are falling apart.

Despite the economic problems being global Ambrose Evans-Pritchard warned that the ECB is “compounding the effect” by not joining the other nations such as the USA, Japan, the UK, Switzerland and Canada in quantitative easing. He also mentions Tim Congdon’s warnings that the eurozone money figures are “horrifying” and that the “senior people in the ECB (and the Fed) have little organised understanding of debt-deflationary processes initiated in late 2008.”

He concludes that Britain’s problems have been created by the Government which the people will soon be able to sack, but asks: “How can Europe’s voters sack the ECB?” Sadly they can’t unless they can convince their governments that the whole EU project is a bad idea and leave. Sadly, all of Europe’s politicians, including our own, listen to each other rather than those who elect them.