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  1. Lord King also suggests that Germany, rather than Greece, might pull the trigger on the eurozone. He writes: Germany faces a terrible choice. Should it support the weaker brethren in the euro area at great and unending cost to its taxpayers, or should it call a halt to the project of monetary union across the whole of Europe? The attempt to find a middle course is not working. One day, German voters may rebel against the losses imposed on them by the need to support their weaker brethren, and undoubtedly the easiest way to divide the euro area would be for Germany itself to exit. Mervyn King, the former governor of the Bank of England, has fired a fierce broadside at the eurozone - claiming the single currency block may be doomed. In a new book, the man who steered Britain’s central bank through (and into) the financial crisis warned that the tensions within eurozone - and the huge debts piled up by struggling members such as Greece - can never be fully resolved. Crucially, King also argues that any moves to harden up the single currency could also backfire. Closer political union (which would make it easier to forgive Greece’s debts) will actually inflame popular anger against the eurozone project. As he puts it: “Monetary union has created a conflict between a centralised elite on the one hand, and the forces of democracy at the national level on the other. This is extraordinarily dangerous.” Breaking up the 18-member strong union may be the only way to allow Europe’s struggling Southern states to regain competitiveness. Here’s more from King, via the Daily Telegraph (who have the serialisation rights): The more likely cause of a break- up of the euro area is that voters in the south will tire of the grinding and relentless burden of mass unemployment and the emigration of talented young people. The counter-argument – that exit from the euro area would lead to chaos, falls in living standards and continuing uncertainty about the survival of the currency union – has real weight. If the members of the euro decide to hang together, the burden of servicing external debts may become too great to remain consistent with political stability. But if the alternative is crushing austerity, continuing mass unemployment, and no end in sight to the burden of debt, then leaving the euro area may be the only way to plot a route back to economic growth and full employment. The long-term benefits outweigh the short-term costs. Outsiders cannot make that choice, but they can encourage Germany, and the rest of the euro area, to face up to it. If the members of the euro decide to hang together, the burden of servicing external debts may become too great to remain consistent with political stability. As John Maynard Keynes wrote in 1922, “It is foolish… to suppose that any means exist by which one modern nation can exact from another an annual tribute continuing over many years.” Here’s the full piece: Daily Telegraph: Lord Mervyn King: ‘Forgive them their debts’ is not the answer
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