For those who are not old enough to remember, these are the immortal words of Mandy Rice Davies.
Now throwing a link quickly back across the Atlantic, Dave Altig at Macro blog picked up my ECB post and added a response from Hans Eichel.
But, the plot does thicken a bit.
The Forbes article Dave links-to mentions a confidential research note from the German Finance Ministry which points out that:
“under the EU monetary union, Germany has lost its economic advantages because the country can now no longer lower interest rates compared with other European states”.
“The report said states which had high interest rates before the monetary union was launched — and named Greece, Ireland, Portugal and Spain as examples — have used the euro currency to its ‘enormous financial advantage’ while in Germany, the euro has effectively put a brake on economic growth.”
This rings true, since this is what many of us have been arguing (I would rewrite ‘enormous financial advantage’ with ‘to get enormously into debt via excessively cheap interest rates, but then I am a pedant). And given that the Franco-German axis can no longer be relied on, and that the ECB is ignoring German pleas for help, it is only reasonable that they should be thinking about what is happening and requesting the appropriate policy oriented research. They would be irresponsible if they didn’t.
Finally, I’ll conclude with the comment I just posted on Dave’s blog:
The interesting thing is that no-one is denying that this meeting took place. Possibly it was a lecture by Fels, where he outlined his already well know difficulties. Fels is refusing to comment.
The significant thing is that this is even coming on the radar. The euro is alive and well, but Eichel and Weber clearly feel the need to be briefed on a plan ‘b’ should the day ever arrive.
I think we need to take this a day at a time, and just see how long it takes the EU bankers and politicians to put the ship upright again.
On the denials, this reminds me of Christine Keeler (sorry, it was in fact Mandy Rice Davies, oh, what the hell) during the Profumo affair: well he would say that, wouldn’t he! 🙂