United States of Europe - or Bust

The word holds its breath while the future of the global economy is decided by what agreement, if any, can be reached between Angela Merkel and Francois Hollande and how this interplays with the results of Greece's election on June 17th.  Barack Obama and David Cameron are playing supporting roles and repeating the mantra that the choice between austerity and growth is a false one.  True that may be, but the real choice - and it could still go either way - is between economic meltdown or the decades delayed theft of the democratic rights of eurozone citizens, orchestrated by the European political elite of times past.

The previous era's elite, headed by Chancellor Kohl, Jaques Chirac and before him Francois Mitterrand, bequeathed the Euro to their citizens in the full knowledge that to avoid or survive a crisis like the one that has been unfolding for the past two years, the prize of fiscal and therefore political union would have to be realised.  Though these particular heads of state were not known to be scholars of economics, they were surely aware that a currency union, in which mobility of labour is hamstrung by linguistic and cultural barriers, could not ultimately work without fiscal harmonisation.  The payment of taxes by every eurozone citizen to a supranational agency, allowing automatic fiscal transfers between the more and less prosperous states, was always the endgame.  The cynicism of the previous elite allowed the construction of a currency union ultimately doomed to self destruct without the eventual quantum leap to fiscal union - which in ordinary circumstances would never command the support of the citizens it affects.

Monetary union was foisted upon the collectively skeptical European peoples who were made to believe that they could share one currency, a common interest rate for an entire continent, with each nation state continuing to maintain sovereignty over taxation and spending.  That lie - one of the greatest in political history - is now being exposed.  

The choice now is between a so called 'Grexit', following which the risk of a total eurozone banking meltdown is too high to countenance, or the mutualisation of debt - Eurobonds - as a holding step before fiscal harmonisation, and ultimately a European superstate, can be achieved.  This current era of European political leaders find themselves well and truly hijacked by their forebears.  The idea of an exit followed by devaluation for Greece or any of the peripheral EZ countries leading to tolerably short term chaos followed by a rapid return to growth as exports from those markets become 40% – 70% more competitive is a false one, given that the component economies and markets are too entwined to be unravelled without the near certainty of mutually assured destruction.  Merkel & Hollande are faced with a perfect Hobson's choice.  Let Greece go, and likely Portugal, Spain and possibly Italy as well, and risk total Eurogeddon or ignore the wishes of the German people by issuing Eurobonds and then go against the wishes of all EZ electorates by creating the superstate they never wanted but which will, one hopes, safeguard their prosperity.  

Maintain relative prosperity and accept a fast track to a United States of Europe, or otherwise maintain democratic free will - possibly - if democracy is able to withstand the ensuing economic chaos.  That is the choice bequeathed to the European peoples & their leaders today by Kohl, Chirac and Mitterrand.