In Chess, it is good etiquette to topple your king when the position is hopeless.? Why prolong the agony?
Now, I am only a casual player of chess.? I play maybe? one to three games per year since I turned 25.? I’ll tell you two quick stories.? I played chess on Yahoo! six years ago, and was unrated.? After engaging a game with a “Class C” player, he found himself in a bad position after 20 moves, and said,”You may be unrated, but you are clearly not a beginner.”? I won shortly after that, with him resigning before checkmate.
Then when I was 22, my suitemate at the grad dorm invited me to his father’s 50th birthday party. (Being 50 now, it makes me think.)? A fellow asked me if I would like to play chess.? I said yes, and in a long, closed, ugly game, he crushed me.? I toppled my king, so as not to prolong the agony.? He grinned at me and said, “Good game.? I’m a rated chess Expert.? Want to play again?”
The grin got me, so I said yes though I knew I could not beat an Expert.? I was a Class C player at best.? I was White this time.? I played an aggressive open game and somehow forced a checkmate on move seventeen with his king in the center of the board.? The look on his face was precious to say the least.? Then the surprise came.? An old guy watching behind me said, “You have talent with combinations in open games.? Do not play closed games.? I am a Chess Master.”? He then proceeded to play the Expert, and trounced him solidly.? I did not dare play him, though there was no opportunity.
My personal history in Chess is only here to describe when one should give up.? My view is that the EU should give up on the Euro, and plan now for its demise, going back to individual currencies for each nation.? The experiment has failed.? Topple the King.
If all Eurozone nations collectively give up on the Euro, and it ceases to exist, after a period where national currencies float against the Euro to determine breakup value, that would be a good thing.? We all have known that it is impossible for monetary union to exist without political union, unless a small nation be a slave to a larger one (US-Panama).
Is Greece having a liquidity problem or a solvency problem?? I think it is the latter.? Extensions and additional loans to a country that has structural solvency problems will not solve the problem, but merely extend the problems.
If you are in Germany, France, or the Netherlands, rather than bailing out Greece, take the cheaper route — bail out your banks for losses on Greek debt, and be prepared to do it for other weak Eurozone nations.? Prepare for the dissolution of the Eurozone; it is coming.? Topple the King.
Or , be more aggressive, end the Eurozone entirely because it is flawed in entire, and let national currencies re-emerge.? It will be better for all nations involved.? Germans won’t? have to subsidize others, and Greeks will be able do devalue and survive, as in the past.
To the Eurozone, I say, “Topple the King.”? You should have done it long ago for the good of all.? Free trade is a good thing, but a common monetary policy is not.? Give up before you are checkmated by the global bond markets.? It may come slowly or quickly, but it will come.
PS — to this day, I don’t play closed Chess games.? My winning percentage has gone up.
the current plan is castling…tuck the prize back behind an impenetrable wall (sic), or leave it stuck in the corner and just a matter of time before it’s overwhelmed
I am from Germany and would be interested in knowing what would happen to the EURCHF rate if Europe were to give up on the Euro – how would that be replaced by a DmarkCHF rate? I would be very thankful for any help (maybe just a link)!
This is just a guess, but if Germany replaced the Euro with the DMark, I suspect the DMark would rally vs the CHF. Germany is a large country following relatively rational economic policies, and people would want to place safe money there. CHF would lose some of the safety trade cachet, plus, the currency is probably overvalued.
What’s wrong with flighting the classes of players? C player Greece isn’t in the game with A player Germany, but France and the northern tier could be. Italy can play a competent game with Spain. So why not have a Euro, a Southern Euro, and a Drachma?
That’s one possible outcome. I think if that outcome occurred we would have a second round of unraveling 10 years out. Currency unions are inherently unstable without political union.
FACT. However, the attempt to have the Euro currency is rooted in memories of WWI and WWII, and part of the attempt to avoid revisiting that method of dispute resolution. So in that sense, we are all well-served by the effort, even if it only delays the inevitable. It’s gonna be an interesting next 50yrs on planet earth, eh?
You alluded to the fact you can have currency union without political union. Currently Panama, Ecuador, and El Salvadore are dollarized countries. I believe that El Salvadore even has seignorage rights, which means they can print dollars.
Lest you claim that they are tiny, China (yes, *that* China) has a dollar peg. I don’t see calls for them to leave the dollar zone. A peg is not a union, but it effectively imports the parent country’s monetary policy.
The move towards further integration has tremendous institutional momentum behind it, and it started with the Treaty of Rome in 1951. I was a Euro-skeptic, but I’m more of a believer now than I was in 2008. I’m impressed by the commitment of Germany to the currency.
Doug — my view is that core Europe has decided, subject to the will of the voters, to support the fringe as long as they can. Eventually either 1) the voters will cut them off, or 2) the core will inherit the problems.
Either way, it will fail, so as I have argued from the beginning, it is better to fail small than fail big.
I would claim that the above nations are tiny, but I was an early observer that China did not float, but pegged to the dollar. That is *not* a sustainable relationship. They do import our monetary policy, and then fight it in a variety of ways, most of which discriminate against consumers in China.
I’m not a euro-skeptic because I don’t like Europe. I’m a skeptic because historically, what they are doing does not work. You can’t have monetary union without fiscal policy integration, and that is not there.
yet…