Joint Call by French and German Economists To Abandon the Euro

April 28 (EIRNS) — In a very targeted intervention against the
euro, 14 prominent German and French economists, seven of each,
have demanded “an end to the euro experiment.” With Jacques
Cheminade’s powerful intervention into the French Presidential
campaign and the growing resistance to the ESM in Germany, this
cross-border intervention comes at an important point. It should
also be noted that a September 2011 article in Frankfurter
Allgemeine Zeitung by anti-ESM fighter Bundestag member (MdB)
Frank Schäffler (FDP) on how to separate bankrupt banks, (“Let
the banks go bust”) was reprinted in full in the April 26 issue
of the Swiss financial daily Neue Zürcher Zeitung (NZZ).
The call of the 14 professors and managers was reported
today by major German and French press, including in {FAZ} in
Germany, {Marianne} in France. The “Appeal to the Governments of
the European Union” was worked out in Düsseldorf on April 27 and
a meeting last year in Lyon.
The declaration is clearly limited, as it does not
explicitly identify the debts of banks and speculators as root
cause of the problem; they also don’t address the need for bank
reorganization or Glass-Steagall, nor major projects to rebuild
the real economy. But they strongly attack a “global financial
oligarchy,” which is dictating policies to governments and
intentionally destroying the foundations of life for the people.
It starts off with a quote from Heinrich Heine, which can be
roughly translated as “‘You should have the courage to tell your
people, when the hour has arrived.’… 13 years since the
introduction of the euro it is obvious, that the euro currency
experiment not only has not fulfilled its promises, but that its
continuation will even lead into chaos.”
Paraphrased, the declaration says:  Instead of prosperity,
there is economic decline and rising unemployment; instead of
fiscal discipline, state debts have increased irresponsibly,
which was not prevented by painful cuts; instead of better
economic integration, differences between individual countries
have increased, which has hurt the harmonious development of the
internal European market. Instead of further integration of
peoples, hostility between debtor and creditor countries is
growing; instead of further democratic development, we see that
decisions are imposed upon people, in which they have no say and
which they reject.
The signers call the various emergency parachutes for the
euro “in vain,” since they only deal with state debts, and not
with what they call the root of the problem — lack of
competitiveness and negative trade balances in Southern Europe.
Efforts to compensate for that by internal deflation is pushing
these countries deeper into depression, as seen historically in
Germany (1930) and France (1934).
By trying to reach an aim, which is unachieveable anyway,
Europe is being sucked into a recession, leading to concerns for
the whole world. The ECB sees no other way out for the euro,
against its principles and statue, than to print massively money
for the banks.
It is also illusory to believe, that a “transfer Europe”
would stabilize the currency union. To constantly transfer
hundreds of billions of euros into countries will socialize the
state debts. This cannot work. The convulsions are increasing and
are hitting not only the financial markets, but also the real
“If this euro rescue policy is not immediately stopped, the
adventure of the common currency will end tragically: the
economic situation will become worse, unemployment will get out
of hand, social unrest, increasing extremist tendencies,
re-emergence of old conflicts, dissolution of democracy and rule
of law — all these negative factors will lead to ungovernability
in Europe and massively hurt Europe’s relevance in the world.
“The European Union no longer can be a ball game of a global
financial oligarchy, which aims to destroy the foundations of our
life. Is it not shameful to witness how they subjugate politics
and the economy according to their interests, pushing these to
the forefront?”
It is obvious that only with the instrument of devaluation
and revaluation of currencies, is there any chance to end
inequalities between the countries and to get growth started
again. History provides ample evidence of “breaks in currency
unions. It is possible to steer them politically and economically
and very often these measures have proven to be reasonable.”
Therefore, “the economists call on their governments to
propose to other member countries to put an end to the euro
experiment and to take the following measures:
“* replace the euro with national currencies, with each
state retaining all its prerogatives, while certain countries may
reach bilateral or multilateral agreements to pool their
“* create a new European monetary system, having a European
unit of account, equal to the weighted average of the national
currency units;
“* list upfront the desired parities of the national
currencies to that unit of account, parities calculated so as to
limit speculation, restore the competitiveness of {all} member
states, ensure balanced trade among them, and reduce
“* ensure that the actual exchange rates of the national
currencies will then be stabilized within a fluctuation band to
be determined;
“* convert internal prices and wages in each country, as
well as bank assets on the basis of one euro for each national
currency unit;
“* convert, by applying the same rule, the public debt of
all the euro countries into their new national currency;
“* convert international private loans and debts into the
European unit of account.”
Public and bilateral debts can be renegotiated bilaterally.
During a transition phase, “internal debts are automatically
changed from euro to the respective national currencies.
International debts, be they private or public, will be repaid in
their national currency.” Of course this means losses for the
creditors, but due to the ensuing improvement, they will be
better off with this policy than with the present course. “If
banks get into trouble by this, adequate measures should put them
on the one side on a healthy financial basis, and on the other
side stop a tendency towards ‘moral hazard.’
“The transition should be as short as possible, since
technically it must not be problematic. The new rules must be
clearly announced. The states, with support from the
now-independent central banks,  have to ensure that the
transition does not impair the stability of the European
financial system, and moreover, that it provides the means to
actively revive the economy.
“By their expertise, along with their commitment and sense
of responsibility, the French and German economic experts want
with their appeal to contribute to a revival of the European
idea, on a new and realistic basis, to strengthen the European
economy and to recreate the trust of the population in the
durability and functionality of their currency order.”
The seven German signers are Professors Nölling, Starbatty,
Schachtschneider (the known anti-euro Professors), Spethmann (who
has also sued against the euro rescues packages), Wolf Schäfer,
Rolf Hasse and Bruno Bandulet. They are described as “liberal.”
The seven French signers, people are well known to us. Some of
these are “protectionists”: Jan-Luc Greau, Philippe Murer and
Gerard Lafasy in March signed another call for revising the
European treaties and for imposing protectionist tariffs, so that
European workers would no longer have to compete with low-wage
imports. Some the signers are said to be close to former
Presidential candidate Nicolas Dupont-Aignan.

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One Response to Joint Call by French and German Economists To Abandon the Euro

  1. bonbon says:

    This is a useful intervention. I have seen these well known “insiders” over the recent time start many useful discussions within the system. I ask myself why FAZ either allows or was forced to open the door? We are seeing monetarists getting upset enough to break rules.
    But what about monetarism itself? This may sound abstract, theory to many, but after repeated engagements on this point I realize it must be “put on the table”. Quite a few of the above luminaries are monetarists, most easily identified as the Austrian School. As we get closer to the financial turmoil, this School becomes more, let’s say, imperious. What is this School, that President Higgins rightly pinpointed at the London School of Economics this winter? We also have an otherwise very thoughtful US Presidential Candidate, Ron Paul, that is an extreme example of Austrian School leanings.
    To start, what did highly educated Scotus Eriugena’s say when confronted by the great Karl der Kahle, Carl the Bald, a descendant of Charlemagne, in front of his elite troops and the public :
    “How far is a Scott from a Sott” (an Irishman from a drunkard)
    “Tabula tantum” replied Scotus (the breadth of the table).

    Today on that table is monetarism! To make this clear raise these two points in any company :
    (1) Glass-Steagall, the Government action of splitting banks as FDR did in 1933,
    (2) Massive projects required for human survival and economic growth
    Glass-Steagall implies Government intervention, and point 2, massive projects, mission-oriented directed programs are anathema to that School as such, but also because of the impossibility of financing without Hamiltonian Credit.
    Why the difficulty?
    I will try summarize it here :
    That School proudly proclaims “sound money” as the cure for the current ills. This quickly boils down to the British Gold Standard. Surprise? But we have to go a little further. The famous von Hayek of that School, delivered a keynote lecture on economics, precisely identifying the underlying treatise, Bernard Mandeville’s “Private Vice, Public Benefits”, or “The Grumbling Hive” as not only an Economics masterpiece but also a PSYCHOLOGICAL stroke of genius.
    We quickly find that the School’s economics is based on a single axiom, that with sound money the economy will spontaneously order itself, in an unknowable way, using “complexity” to argue the point, but most do not suspect the second tactic.
    Monetarists can make incredibly good statements about currencies, banks, but the ambush is prepared for the unsuspecting as the School really believes it has concentrated firepower ready. They, using the Mandeville-ian psychological judgement of human nature (as von Hayek revealed) expect a terrified rush out of chaos for susceptibility to “gold and silver” making it a done deal that monetarism will survive.

    In other words the Austrian School is primarily psychological. I suspect the formula of gold and silver is to mesmerize, because of a core belief that human nature is Mandeville’s Private Vice, exactly as Carl the Bald imperiously projected on Scotus Eriugena, to his eternal embarrassment.

    It is interesting that the Austrian School is part of the Fabian London School of Economics (I believe there is a Mandeville Lecture tradition). It is eerie that the Tavistock (British Freudian School) long after Mandeville, pioneered psychological warfare based on such methods.

    Today we have an imperious financial “faceless monster”, as Tremonti of Italy and Hollande of France identify, posing that challenge again in a very nasty way.

    Gyrari tabulas! Turn the tables!

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