Strive to save euro but prepare for exit
Will Merkel and Sarkozy sacrifice their grip on power to preserve the ailing European currency, asks Marc Coleman
Published 18/09/2011 | 05:00
So YOU want to leave the euro? An Irish exit from the single currency is not yet probable. But it is becoming more possible and if it happens it will be a Neil Blaney rather than David McWilliams affair. While David argued that we should leave of our own accord, the most likely scenario is that the euro will leave Ireland. Exasperated by the cost of bailing out feckless governments, the Germans may simply walk out and go back to their deutschmark.
According to one study published last week, that would leave each family in Ireland bearing a €45,000 cost of a euro break-up. That should make us think twice about populist rhetoric about leaving the euro. Nonetheless, there is wisdom in following the old Roman saying: "Si vis pacem, para bellum" -- strive for peace but prepare for war; we should try our hardest to save the euro but we should also plan for the worst.
As IMF boss Christine Lagarde put it politely last week, the euro is suffering from "policy indecision and political dysfunction", of which Greece is a classic example. Like a rabbit stuck in the glare of headlights, its government is transfixed by a public sector that makes ours look like Ryanair: wages are double those in the private sector, recruitment is performed by finding cronies of the ruling socialist party and work practices are generous -- bonuses for turning up to work on time and being able to use a computer. The result is an embittered private sector that, understandably, doesn't see why it should pay taxes to fund a corrupt and failed state.