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Cóir Date: 09.09.2010 Wilhelm Nolling, professor of economics at the University of Hamburg in Germany represented a number of economists who believe the EU’s mechanisms to protect the Euro currency could cause social upheaval among its member countries.
It was reported that Professor Nolling outlined his distaste toward the EU’s bailout of Greece, deeming it “ridiculous” to expect them to be able to pay back lenders. He outlined that their sheer leak of competitiveness and large debt are huge obstacles.
It was also stated that Nolling and three other economists were involved in a German Constitutional legal battle claiming the EU infringed the no bail out clause of late. They disputed the Euro zone support mechanism of €440 billion, the European Central Bank sovereign bond purchasing scheme and the EU/IMF Greek bailout in the range of €110 billion. He said this was a widely held fear among many Germans when leaving aside the Deutschemark in exchange for the Euro 11 years ago.
Since the Euro’s inception in 1999 there was far less harmonisation between nations in terms of wages and costs etc as many Euro zone states remain even more polarised than when they began out.
The alternative offered by Professor Nolling is to drastically reduce the euro zone. He believes countries like Ireland should have their fiscal autonomy back.
He said: "We need to form a new heart of the euro, France, Germany, Finland, Austria and the Netherlands. All the other states should be given their freedom back. That would give them a real opportunity to increase their competitiveness through currency devaluations. It is currently impossible for them when they are 30 percent out of line. Salaries and cost structures are way out of line."
Finally he also said, “At present, no one is sure when the German constitutional court will come to its decision, but a rejection by the powerful group of judges is likely to have explosive consequences.”
Meanwhile outside of Germany there was similar stories.
Spanish daily newspaper, La Vanguardia cited a Eurobarometer poll that claims 54% of Spaniards believe if they still had the peseta instead of the euro they could have withstood their economic woes easier. And the Financial Times tells us that banks have already began anticipated plans in the event that an EU country has to leave the euro with a possible fallout occurring on their bond markets and derivatives.
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