Austerity measures, collective wisdom, Deutsche Mark, Euro, European Union, Games Indians Play, GDP to Debt ratio, Germany, Greece, Iceland, individually wise, Ireland, macroeconomics, Portugal, Prof Harkant Mankad, Spain, tame the monkey, UK
For some time I did not write. I was considering writing either on “Utopia – the Dream world” (in Hindi – Ram Rajya) a type of communism in my opinion or on economics. A news item of yesterday made me select economics the later one. This news read “Deutsche Mark set for comeback instead of Euro in Germany”. I thought that Euro may die soon, so first thing I wrote to Prof Mankad (he is an expert of Macroeconomics) for his opinions on my fear of disintegration of European Union or dilution of the currency Euro.
I believe that the concept of EU is very interesting and appreciating. However the question to ask is – who would tame the monkeys, those who are more interested in personal gains rather than collective wisdom? I read a book on similar concept of being individually wise and collectively dumb – “Games Indians Play“. The same is happening with different economies. Austerity measures – why there is so much of hue and cry? Because as per my understanding of austerity measures – “maximum of expenses to be controlled by austerity measures are on usage of tax payers money”.
Earlier, when I read the Financial Times often I used to wonder about the crisis in EU. And I wrote about Germany as probable next super power. I had few reasons to think that way. However, later and now when I see economic crisis in EU (Greece, Spain, Iceland, Ireland and Portugal the list may become bigger in future) I changed my mind. Even further, when I read the news yesterday about ‘Deutsche Mark’ I felt more compelled to think of bigger consequences – could EU disintegrate? Is Euro dead?
The other reason to dwell on my fear was another discussion with Prof Mankad some time back. He said UK has foreign debt in multiples of its GDP, what could happen to UK? UK has 400% of external debt to its GDP. So, are we seeing Euro as dead in future or Germany would have two currencies running in parallel – Euro and Mark? only time will tell us.