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Don't Eat With Your Mouth Full

Where can we live but days?

Why Aren't they Screaming?
By chance I caught a programme last night in which Michael Portillo travelled to Greece and Germany to talk about the Euro crisis, both with "ordinary people" and with policy makers. It was interesting, and not least because, while everyone admitted that it had been a mistake to admit Greece into the Euro, and everyone was aware (not only now but at the time) that the books had been cooked to permit it, very few people in either country wanted Greece to leave. Portillo's party trick was to produce, at the end of each interview, a 20 euro note and a drachma note (I forget the denomination), and ask Greeks to choose which currency they wanted for the future. (He did the same in Germany with euros and marks, though that was a more predictable exercise.)

Not one Greek - from the finance minister, to the civil servant running a soup kitchen, to the unemployed woman with no hope of a job - chose to take back the drachma. Even those who were against the bail-out package and its attendant strictures, were still in love with the euro that had brought them cheap money, German cars and a general buzz of twenty-first century modernity in the early 2000s. Portillo seemed genuinely puzzled.

Now, there is a cynical explanation. If I walked into town right now, and said to the nearest junky, "Which would you rather have? Some more of the heroin that has brought you so low, or this bag of cheap but healthy muesli?" I can guess the answer I'd get. But, amongst those Portillo talked to at least, the euro still represented the Future. The fact that its corollary was poverty and humiliation without any foreseeable end seemed not to have dented that sense, or indeed to have registered. Then again, when the alternative is cheap muesli, it's not much of a choice.

With the Germans, Portillo's line was that Germany's success as an exporter was partly built on the poverty of poor Euro-states such as Greece - not only because they seem to be addicted to buying Porsches (as one German pointed out, there just aren't enough Greeks for that to have made the key difference) - but because their poor economic performance dragged down the value of the Euro as a whole, making it much easier for Germany to export around the world. While the Chinese were able to keep the yuan low by government fiat, the Germans were able to do the same by keeping the Greeks in the club. By this cynical reading - although Portillo didn't spell this out - Germany not only needs the Greeks in the Euro, it needs the Greeks (and/or Spain, Portugal, etc) to be in a state of perpetual crisis, which it can manage by drip-feeding enough bail-out money to keep them ticking over, but not enough for them to grow their way back into prosperity.

Of course, there's a good deal more to German prosperity than a low euro, and the German commitment to the euro is founded on more than their wish for a healthy balance of payments. But it cast an interesting sidelight on the current situation.