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Anorak | Yes, Yes, We All Hate The Bankers But Blame The EU And The Politicians

Yes, Yes, We All Hate The Bankers But Blame The EU And The Politicians

by | 26th, September 2011

YES, yes we all hate bankers. After all, they’re the ones who got us into this whole mess, aren’t they? So, we’ve got to rein them in, force them to our will, instruct our politicians to tell them what to do.

Oh Aye ?

Well, so much for that. The FTSE 100 fell as much as 1.7 per cent this morning, while overnight the euro and Asian stock markets tumbled, after Europe’s leaders announced their grand 2-trillion-euro plan over the weekend to drag the Eurozone out of the mire. It appears the markets are well past the point of believing that political leaders can get us out of this mess. The consensus is that the plan is not concrete enough.

Now it’s true that FTSE has recovered but that doesn’t change the basic insight of the observation.

It might even be true that it is bankers who got us into this mess: it’s a hard one to argue about Greece and the spending habits of entire drunken navies, but it’s just about possible to believe. However, even if it were the bankers, that doesn’t mean that giving the politicians more power or even more of our money is going to kiss everything better.

It is in fact possible that the entire (political!) idea of the euro itself was wrong. Even, that there’s absolutely sweet fa that anyone can do about it.

Leave aside the whole banking thing, even Greece, and consider the underlying economics. You can have a single currency in an area only so long as that area is an “optimal currency area”. A bit tautological, but really it just means an area that you can have a single currency in without screwing any one group of people too much.

There’s a few things you can do to make a larger area more like an optimal one too: have one central economic policy. Have the rich regions subsidise the poor. Make sure there are tax transfers

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Posted: 26th, September 2011 | In: Money Comment (1) | Follow the Comments on our RSS feed: RSS 2.0 | TrackBack | Permalink