This, at least, is the gist of the headline from the AP: “German who helped start euro now calls for its end.” The AP article that backed it up was just four paragraphs long and led me to think: this guy has awakened to reality! He's been converted to free market principles! Hallelujah!
Even Ambrose Evans-Pritchard, the conservative writer for the liberal Telegraph, seemed to buy the line, saying “Oskar Lafontaine, the German finance minister who launched the euro, has called for a break-up of the single currency to let southern Europe recover, warning that the current course is ‘leading to disaster.'”
Ever the skeptic, and curious as always to see if there was more to the story, I decided to do a little homework, lest the AP and Evans-Pritchard would lead me to paroxysms of premature celebration. Alas, there is more to the story. Here's what I found:
First, Oskar Lafontaine was only Germany's finance minister for four and one-half months, hardly enough time for a bureaucrat to organize his desk and hang pictures on his walls. It was his boss, Chancellor Helmut Kohl, who was the driving force behind the creation of the euro and the European Union, not Lafontaine, although OL went along with the scheme.
Second, Lafontaine was a leader in the extreme left (read: former East German communist) political party, The Left, which was (and is) so extremely totalitarian and militant that its (and his) activities were under surveillance for a time by the German equivalent of the FBI.
Thirdly, his post to The Left's website said no such thing as wanting to break up the eurozone. Instead, he grieved that efforts to create the Eurozone as a precursor to a single European state didn't work out quite as well as he had hoped. Here's what the man actually said:
A common currency could have been sustainable if the participants had agreed on coordinated productivity-oriented wage policy. During the nineties, since I considered such a coordination of wages to be possible, I agreed to the establishment of the Euro.
Translation: the euro was expected to cause such problems as to force the various sovereign states to give up essential freedoms to a continent-wide regulatory agency to force political integration. But that nasty bug-a-boo, love of sovereignty, kept getting in the way:
The institutions established for that coordination … have been circumvented by the governments. Hopes [including mine] that the establishment of the euro would force rational behavior on all sides, were in vain. Today the system is out of joint.
This is how a thoroughly statist politician says that he has made one helluva mistake!
But, and this was missing from most of the commentaries I read about OL's web posting, since it didn't work out, those nations who have resisted the siren call of regional government to replace national ones, should go back to the old system – the European Monetary System! This would allow Europe to right itself economically, you bet:
The point is to make possible once again controlled depreciations and appreciations through an exchange-rate regime run by the EU [European Union].
For that purpose, strict capital controls would be in the inevitable first step, in order to regulate capital flows [between nations]. After all, Europe has already taken this first step in cyprus.
This is no statist/communist/totalitarian politician who has finally seen the light. He wants to back up and start over, with the hope that this time they'll do it right!
Sometimes it pays to dig a little behind the headlines.