It is neither as an enemy of free-market capitalism, nor as a French devotee of Colbertism, much less as an anti-American European that I take the liberty to address you. Rather, I write to you as a militant supporter of the euro, driven by both passion and reason, and annoyed at having been obliged to read over the years such a mass of prophecies, including in The New York Review, concerning the imminent death of the euro; some of those predictions, for whatever motives, whether ill or well intentioned, aspire to become self-fulfilling prophecies.
Behind a number of these views, it is possible to glimpse a deeply held belief and a gut feeling that no political construct—and the euro is a political construct, make no mistake—can govern markets. You trumpeted this critique of the euro from the day that the Maastricht Treaty was signed until the day the single currency was implemented. Once the euro went into circulation, you fell silent for as long as the euro seemed to be strengthening against the dollar, with a favorable exchange rate ranging from $1.30 to $1.40, but you piped up again once it displayed signs of weakness (let’s not forget that it dropped from its initial rate of $1.17 to a low of $0.95) and now the sovereign debt crisis seems to have swept some of you giddily to the brink of what the Germans call Schadenfreude—literally, a malicious joy in the sorrow of others.
Many of you fall outside this category: you do not qualify as radical market zealots, you claim to be strongly in favor of the European conception, you say that you support the euro, but you cling to a statement of principle: no currency can survive if it is not based on political power. Unless the Europeans race, at top speed, through every step that leads to a single federal state, the euro is doomed. Since the more astute among you are well aware that you are preaching the impossible, you view the single currency as a dead letter.
There are also a number of economists in your ranks who see a single currency as a blatant negation of the underlying principles of any market economy. Obsessed as you are by competitive inequalities, you believe that the less competitive countries, unable to devalue their own currency, would be forced to resort to an internal deflation whose scope would trigger uncontrollable social unrest. This syllogism is particularly dear to the heart of my friend Nouriel Roubini: the outlying countries of the European Union are being forced to conduct internal devaluations, and especially salary cuts, that would lead to open revolution; the governments therefore will opt for an exit from the euro rather than face revolution.
Last of all, many of you think that the euro could survive if the European Central Bank (ECB) operated …
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