Krugman talking in “Rationality and the Euro: Gordon Brown. concluded that the case for euro membership was not good. And boy, was that a good call.there’s no comparison between British woes and those of other European nations that had large capital inflows and housing booms. it’s also largely because of a point that was perfectly well understood in 2003 and has been confirmed by experience: “internal devaluation”, reducing relative prices with a fixed exchange rate, is really hard compared with just devaluing your currency. Here are BIS estimates of the Spanish and UK real exchange rates, 1999-01 = 100:
Krugman: “Notice how Britain effortlessly achieved a real depreciation that, if it’s possible at all, will take years and years of mass unemployment in Spain.”
So let’s repeat slowly to expose the prestigious professor’s reasoning. Suppose a Spaniard and a Brit started in January 1999 with a total worth of 300,000 Euros. Now the Brit is worth 225,000 Euros, and the Spaniard 330,000 Euros (I adjusted to the latest value Euro/Pound). How did they get there? The Brit worked very hard, and the Spaniard, less.
So Krugman’s logic is this: work hard, and get poor effortlessly: good. Work less, and, however your efforts, get richer: bad.
Europhobes insist that getting poorer, from currency devaluation is good. We just saw it’s not good for one’s wealth. Is it good for GDP? Can one devaluate oneself to prosperity? Krugman loves to claim that this is relatively easy. So how come the British GDP is doing so badly?
Krugman: “an actual rational decision process is all too rare – perhaps especially when it comes to the euro. Talk to euro advocates and they cannot entertain, even as a hypothetical proposition, the notion that the single currency was a bad idea; I came away from one talk with the clear message that the euro cannot fail, it can only be failed, that any problems simply show that countries and leaders lack sufficient nobility of purpose.
And despite the overwhelming evidence that the euro was an even worse idea than it appeared 10 years ago, countries – notably Polandare still considering joining. I understand that leaving the euro is a very difficult thing to contemplate; but getting in now, when you had the great good luck to avoid this mess? Awesome.”
Krugman knows not enough: countries are supposed, by treaty, to join the Euro. Also, although he and fellow Europhobes present the process of the UK not being in the Euro as a rational process, it was anything but. It was a plutocratic process. So what Krugman is saying is that plutocratic behavior is rational. Just as the croc devouring the child, I guess.
Indeed a plutocrat, Soros, made a billion dollars by forcing Britain out of the European Monetary Union. Soros did so, thanks to his corrupt accomplices in the British government.
So, what Krugman is saying is that gangsters conspiring to steal We The People is rational, ”awesome“.
What’s even more awesome is that Krugman keeps on missing the purpose of the Euro, loud and clear. Economics ought to be slave to politics. And, not vice versa, as is the case in the USA. Vice versa, like in “vice”: in the USA nobody object to seeing the so called “president” spend much of his time begging for money from his rich “friends”. (Sponsors, or “friends”?)
Europhobes keep telling Europeans that they should not have a country, but dozens, with dozens of currencies. Try moving around New England, while using several local currencies. That would have a very heavy economic cost. Maybe europhobes want Europeans to be enslaved to what president Roosevelt called, with contempt, the “money changers“?
Krugman’s entire case against the Euro, officially speaking, is that, the poorer the People is, the better it is for the People. Is it not the truth that plutocrats hold as self evident? So europhobes see the worth of the British collapsing with their British Pound, and they say that British devaluation is very good.
Europhobes see Britain doing worse than in the 1930s, and tell us that the Euro is very bad, because PM Brown was so good?
What about logic 101? Is that bad too? Is dereason rational, and rationality illogical?
The anti-Euro obsession allows to focus on what is not the real crisis. Spain, for example had a mis-investment crisis, that led to all sorts of imbalances. In any case, the fundamental reason for the present crisis was a political-banking corruption mix. That has nothing to do with the Euro. For example politicos from around Valencia are in jail, just for that reason.
But the banksters have not been prosecuted enough. And why so? Because, in part, all too many pundits make a profession from barking at the foot of the wrong trees. Corruption starts with greed, it ends up with rotten minds who cannot tell reason from hatred, or madness.
It could get worse; plutocrats and plutophiles could, like the Muslim Brotherhood, make madness and hatred into a religion. They have, many times before, in all lands. Then they, and their ilk, could hold power for 13 centuries, as the superstition called “Submission” did in Egypt. Way out? In Egypt, as in Europe? Force. Mental force, and, if that’s not enough, physical force. So the Euro is force, just as the Egyptian army is force.
Sometimes nothing short of force will get things to move, in the right direction! The whole idea of the Euro was to FORCE European Unification further. And this is exactly what is happening, in combination with solving the banking crisis.