Mody’s EuroTragedy

Well even the eurofederalist who I am, can appreciate Ashaky Mody’s last book EuroTragedy: a drama in nine acts. I naturally do not share all the ideas developed by this former IMF economist but I very much enjoyed the reading. Very useful in order to test your European commitment and go beyond what could look sometimes indeed like an empty European demagogy.

Few interesting historical perspectives, like this view that the very origin of the Euro emerged under the Pompidou presidency at a time where exchange rates were still controlled under the Bretton Wood system. The European single currency as the heritage of those not willing to abandon the false security of a fixed exchange system?

Then, naturally the euro as a chaste veil put on the continuous loss of competitiveness of France, so impolitely evidenced by so many devaluations of the French franc.

The Euro as a lost bet on a future political union, as an idealized and failed anker to the German financial discipline, as a demagogical and false trump card promising economical growth and better tomorrows which never came.

Useful to remember the key role plaid by Kohl who became suddenly the most active sponsor of the Euro, selling it to a Bundestag supposed to represent a euro hostile Germany. Also interesting to remember the key role plaid by Gerhard Schröder to let Greece join the Eurozone. So many great German political considerations which were so greatly forgotten as soon as the first clouds arrived…

Don’t wait for Germany she will never come, she will never share, and always told us that she won‘t. Then 48 years after the Werner report which was the first of an endless list arguing that a monetary union is not viable witout any fiscal union, Emmanuel Macron keep trying to convince a Germany which again said no.

Each page of the book we are told that no, a common monetary policy cannot be adapted for so many different economies, and that no, austerity at a time of crisis does not help to pass through the crisis but on the contrary worsens it.

Ashaky Modi criticizes the ECB and its policy from the beginning to the end, and on the contrary continuously praises the policy followed by the Fed and the US government. The black and white picture is so brutal that at the end of the book you are fully convinced that Mr Trump was democratically elected by so rightly frustrated Europeans citizens. It cannot be otherwise. Well personally I would have shown more compassion for Mr Draghi who had the courage to try to counterbalance alone the total absence, betrayal and unbelievable irresponsibility of the entire European political class, at the state or at the European level.

Mody comes with some possible solutions to overcome the current sructural weaknesses of the eurozone’s architecture, such as the introduction of a double euro, the southern countries remaining in the existing monetary union and the northern countries leaving it to create a new one around Germany. Such as the forgiveness of the bulk of the debts, the abandon of the Maastricht criteria, the set-up of an economical growth or employment consideration as second mission to the ECB, the clear affirmation that there is no European financial solidarity in order to make clear that each country is alone face to its responsibilities. This would, after Mody, avoid a European systemic crisis, which is today still a threat.

The ultimate objective set by Mody to Europe is to abandon any ideology, should it be the European one, and try to catch up in terms of R&D and education in order to re-become the ideal republic des lettres, which Mr Mody thought we were before launching the first industrial revolution.

Often caricatural but also somehow refreshing. At least very much useful. You exit the book more realistic but also more convinced because you feel also that what Mr Mody is missing is this European glue which at the end still prevails among us. Not a reason not to hurry-up and not to repair the common house. Because indeed it is in a very poor shape. Let us do this. Pragmatically, in order to solve very concrete problems, that we all face in Europe. But yes leaving the banks of a self-oriented Europeist ideology.

And if you want to read my personal analysis on the same topic you can read this : it is in French, was written in 2013, but still very much valid. And free.


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