Do we need a crisis to change?
French researcher Emmanuel Todd has interesting ideas on what might happen if the Euro collapses.
The following are quotes from the article “What Will Happen if the Euro Collapses? A Few Scenarios” (by Bruce Crumley for TIME.com), along with comments of mine.
Who is Emmanuel Todd?
Todd isn’t an observer anyone should write off. An unabashed leftist who switched his early opposition to the euro to more recent resignation that the useful and beneficial currency is probably doomed, Todd is no ideology-blinded seer of capitalistic disaster. His 1976 book, “The Final Fall”, used demographic and economic data to predict the collapse of the Soviet Union almost to the year, and he has since written studies across a variety of sociological disciplines to accurately forecast (and explain) major developments in Europe. It’s for that reason few people in France are willing to write off Todd’s warnings that recent socio-political events make very real the possibility that authoritarian forces may seek or take power in Italy, Greece, Portugal, Spain, and perhaps elsewhere in Europe, particularly if E.U. turmoil results in monetary and economic failure.
What will happen if the Euro collapses?
Todd thinks that a deep crisis can have positive effects:
French researcher Emmanuel Todd argues that though the implosion of the euro would produce a period of economic pain, panic, and instability, he says that shock wouldn’t last as long as some predict (18, maybe 24 months), before companies and governments picked up and moved on. And because many euro countries would be starting anew after having brushed off huge amounts of debt through various degrees of default, Todd argues the post-euro economies could be re-constructed on more solid fiscal foundations.
Another consequence of such default, Todd says, would be freeing economies and governments from control of what he calls the “oligarchy” of mega-rich investors whose fortunes and interests drive and shape bond markets—and whose gain through safe government securities have influenced political leaders into building up huge public debt in the first place.
His opinion of the Germans is harsh:
Another benefit for European nations, Todd says, would be throwing off the domination of Germany, which he describes as dysfunctionally psycho-rigid, and so focused on its own national interests that it no longer cares about ruining its euro partners.
That is too simplistic. On one hand, Germany has indeed greatly benefited from the European Union. And Angela Merkel (Germany’s chancellor) is sometimes insensitive and uses poor wording. On the other hand, she is right in that we shouldn’t mindlessly throw money at the problem. Being careless about money is what got us into the current mess in the first place. But I still haven’t heard any good ideas about what to do instead.
Do we need a crisis?
The word crisis originally just meant “decision”. It has increasingly gotten a negative meaning. Apart from an economic crisis causing much suffering, it is also a sign that things aren’t working. Something has to change. In that role, a crisis is a chance, it allows us to think about what really matters and to act on it. One of the advantages of globalization is that everything is more resilient and more interconnected. Information now travels faster than ever before which means that it is harder to spread lies and keep secrets and easier to tell people about good solutions.