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ORIGINAL FRENCH ARTICLE: Pour l’euro, ça casse ... ou ça casse

by Bruno Odent

Dire Prospects for the Euro Zone

Translated Wednesday 29 June 2011, by Isabelle Métral and reviewed by Bill Scoble

In the face of the Greek crisis and more generally of the debt crisis throughout the euro zone, the positiom that the European council adopted on June 23 and 24 in Brussels is very much like that of a helpless car-driver who, seeing a wall loom in front of him at the end of a dead-end road, would choose to put his foot down.

The signal failure of the first “rescue” plan for Athens has taught no lesson, blatant though the failure was. When the plan was implemented a year and a half ago, it was already tied to “a shock treatment” that only pushed Greece deeper into the quagmire. Recession for 2011 is put at 3% at least of the GDP. The draconian purge imposed in exchange for setting up a second “rescue” plan - a new plan made necessary because of the failure of the first - will have even more baleful effects. Domestic demand, already lackluster, will be asphyxiated by the rise in levies on the poorest and on the middle class that the Socialist Prime Minister’s government’s adjustment plan promises. This is sure to push the country yet deeper into recession and so diminish its tax revenue. This cannot be the best way to break free from the threat of bankruptcy.

“It will either break through or break down”, EU leaders decreed.

Contrary to what Sarkozy asserted from Brussels last Friday, hope lies in the Greek people’s capacity to mobilize and defeat the plan. Without excluding the possibility of sparking off a major crisis, Greece needs real European solidarity in order to develop the country’s assets instead of selling them off, needs to set up new public services instead of torpedoing those that exist, and needs better to educate its youth instead of leaving them with no future outside of emigration.

All this implies a drastic overhaul of the single currency policy. Member States should be entitled to funding through BCE monetary creation, which would enable them to break free from the rule of the markets and to gain access to cheap loans at various rates, lowest when the investments they permit create jobs or develop crucial infrastructures.

Time is getting short and .the durability of the euro zone is at stake. Similar debt crises are looming on all sides, from Dublin to Lisbon through Rome and even …Paris.

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