steampunk heart

German economist warns Italy faces eurozone exit as coronavirus crisis deepens

Italy, whose already week economy has been crippled by the coronavirus pandemic, should seek help from its own wealthy citizens, rather than relying on Germany and other EU countries, to bail it out as it struggles to bounce back from the coronavirus pandemic, former German MEP and economist, Hans-Olaf Henkel, has warned.

According to The Express, the German suggested that the best solution would be for Italy to leave the eurozone and go back to their own currency, which he dubbed the “new lira”.

Henkel was speaking against the backdrop of widening splits between the north and the south of the bloc, and particularly Germany and Italy, on how best to mitigate the economic and societal impacts of the virus.

He wasn’t alone: at a time when the European periphery has been hoping to get loans, or better yet, grants from Europe, Manfred Weber, leader of the European People’s Party in the European Parliament, became the latest figure to speak out, calling for “strict controls” to prevent Italy and Spain embarking on massive public spending sprees using EU cash.

Henkel was also responding to comments by liberal billionaire and europhile George Soros, who last week suggested the EU had a duty to help Italy, which has been hit harder by the disease than anywhere else in the bloc, by spreading the cost of rebuilding the country’s economy among members of the eurozone.

The former MEP explained: “I share Soros’ views on Italy but do not believe that there is any justification to show ‘financial solidarity with Italy because of the corona crisis’.

“What have Germans to do with the decisions taken by Italian politicians on their health system or the (very late) decisions on the lockdown in Lombardy.”

He also noted that “on average the per capita wealth of Italians is way above the wealth of for instance Germans” and added that “before Italian politicians like Salvini or Conte or anybody claims money from citizens of other countries to mitigate the financial results of their decisions they should ask their own wealthy people to show solidarity with their own people.”

“Rather than letting Italian politicians borrow money from and at the risk of other countries, Germany should make a generous gift in exchange for Italy leaving the eurozone and go back to their own currency (New Lira)! This way Italy’s Central Bank could devalue their currency to become competitive again, get the economy back on its (own) feet and prosper like Italy did before the euro” Henkel said.

The German economist, who stressed his respect for a “globalized, liberal and democratic world”, added: “I know Soros from a meeting some years ago when we discussed the first euro crisis.”

“At that time I advocated the euro to be split into a ‘Northern Euro’ and a ‘Euro for the South’, in each case the currency to reflect the different economic realities prevailing in, for example, Greece, Italy and France on one hand and, for instance, in Austria, The Netherlands and Germany on the other.”

Addressing a proposed solution, namely “perpetual bonds”, or loans which would never have to be repaid, he added: “Soros’ idea of eternal European loans may work on a national basis like they did in the UK and in the US in World War 1, but they would not work on a European level.

“Not only would we be confronted with the same moral hazard such as in the case of euro- or coronabonds, they would also be limited to the eurozone hence create a new border within Europe.”

“On one side are those with solidarity for Italy like Germany. On the other are those without like Denmark or Sweden or Poland, none of them being in the eurozone.”

And that’s why Europe is doomed – the same reason European nations and people have been doomed to waging war with each other for millennia – because when one strips away the profit motive and the distraction that is the pursuit of wealth, everyone hates everyone, and once the money runs out and the shared prosperity ends and is replaced by the shared pain of bailing out one’s neighbor, at that point it’s just a matter of time before the time of death is declared.