• The Euro: On course for disaster.


    Above is the Preußen. She was a German steel-hulled five masted ship-rigged windjammer built in 1902 for the F. Laeisz shipping company and named after the German state and kingdom of Prussia. She was the only ship of this class with five masts carrying six sails on each mast within the world merchant fleet. Until the 2000 launch of the Royal Clipper, a sail cruise liner, she was the only five-masted full-rigged ship ever built. This magnificent wind-jammer met a tragic end on 6th November 1910 when the master of the Southern Railway steamer, SS Brighton stupidly sought to cross her path in the English Channel to give his passengers a better view of her! He succeeded. His ship collided with the wind-jammer. Fortunately, there was no loss of life but this beautiful ship was wrecked. The resultant Court of Inquiry rightly stripped the master of the Brighton of his ticket.

    Although magnificent, it was generally held that the Preußen was just too big for a sailing ship. Given the technology of the day she was too much to handle and was not a success commercially. In essence she was a vanity project: a magnificent ship built to demonstrate just how more magnificent German sailing ships were over the ships of other nations.

    Another German vanity project appears to be heading towards the rocks: the Euro. The British Gazette has chosen this analogy at this time as world governments are arguing amongst themselves as to who should succeed Dominique Strauss-Kahn as head of the IMF.

    French Finance Minister Christine Lagarde has emerged as the leading contender as European officials have moved to maintain control over the institution that approved a record $91.7 billion in emergency loans last year and provides a third of the euro-region’s bailout packages. Italy and Sweden have backed Lagarde, and Handelsblatt newspaper reported that the German government is preparing to support her. “I would argue that Christine Lagarde has outstanding credentials,” Swedish Finance Minister Anders Borg said. Borg said her gender is an “advantage” since “half of the world has not been represented as managing director” of the IMF. Italian Prime Minister Silvio Berlusconi said Lagarde would be “an excellent choice” as Europe’s candidate.

    British Gazette Comment: It is vital that US Treasury Secretary Timothy F. Geithner and the other finance ministers act to stop the countries of the Eurozone from putting one of their number in place. The Eurozone countries want the new head to continue to support their lunatic policy of trying to keep the Eurozone together.

    It is vital for everyone that these idiots (the Eurozone leaders) are forced to come to their senses and cut the “PIGS” (Portugal, Ireland, Greece & Spain) loose from the Eurozone and have these countries readopt their previous currencies to float (sink) against a reduced Eurozone.

    This incidentally will have the effect of terminating these countries membership not only of the Eurozone but also of the European Union itself. This of course will save in the case of Greece countries like Germany much money. The Germans will need this extra cash for a Greek default will cost the Germans dear as they will have to refinance their banks – that would otherwise go bust.

    Here we can return to the sailing ship analogy: Imagine the Preußen had not been run down in 1910, survived WWI to be handed over to French owners in 1919, taken over by the Germans after the fall of France in 1940, commissioned as a commerce raider in 1941, interned in Buenos Aires in 1942 to avoid capture by the Royal Navy, handed over to the USN (as a sail training ship) in 1945. Sold by USN to commercial owners in 1960 who resold to a Spanish sail training school in 1990. The sailing school is bailed out with EU money in 1995 and becomes the SS Europa, a EU sponsored sail training ship for young Europeans. Now imagine that a round the world voyage is planned by the European Commission as a flag waving exercise (flying the “Golden Garrotte”), the idea being to publicise sailing ships as “the twenty first century’s answer to that planet threatening problem of CO2 being emitted by the world’s cargo ships!

    The European Commission chose that adventurous chap Paddy Ashdown as the ship’s Master but puts an advisory tribunal of Angela Merkel, Nicholas Sarkozy and Silvio Berlusconi on board to accompany the Master and his crew of young people selected from secondary schools across Europe.

    The SS Europa leaves Brest and Ashdown puts her well out into the Western Appraoches so she can catch the southern trades to take her south into the Southern Atlantic for her first destination, Capetown. After a short stay in Capetown where all the politicians have the opportunity to faun over Mr Nelson Mandela, the SS Europa sets on a perilous part of her journey – across that infamous “Sea of Storms” the southern Indian Ocean – as Europa’s next port of call is Fremantle in Western Australia.

    This is where Paddy Ashdown’s “daring do” lands everybody on board in danger. Paddy – who of course is fully convinced that that deadly destroyer of all life (CO2) is putting the planet in grave danger – decides to show how good a choice sail is over diesel and plots a course that takes Europa south of latitude 50 into the “Furious Fifties.” As the winds pick up to gale force – they are very rarely if ever less in these latitudes, the Europa races across the waves reaching speeds in excess of twenty knots. The wind strength rises still further as they proceed on their perilous south easterly course. The sails are straining at the rigging. A young man from Yeovil goes up to his former MP and wonders if some of the sails should be taken in. Paddy – ever the good European – asks the tribunal, who unanimously declare that none of the sails should be reefed and that Europa must be allowed to reach Fremantle in the shortest possible time to show how superior “eco friendly” sail is compared to nasty, dirty (not to mention planet destroyingly dangerous) diesel!

    British Gazette readers know what must happen. Not taking in (reefing) sail is not an option. As the wind strengthens sail MUST be taken in – and with the uppermost sails first – to prevent the wind from capsizing the vessel. The SS Europa desperately needs a sensible seafarer to knock some sense into Paddy and his political masters. If not the SS Europa will founder in heavy seas and the lives of those youngsters will be lost.

    As it is with the fictional SS Europa, so it is with the real life Euro. The Eurozone is simply too big and diverse a unit to survive the financial storms. It MUST be reduced in size. Failure to do this will cause the Eurozone to founder in the heavy economic seas to come.

    Of course, reefing at such latitudes and in such seas is perilous and frightening. There is the long arduous climb up the rigging as the ship pitches and rolls violently – there is no safety harness here. The cold wind throws the spray that acts as hundreds of tiny needles onto flesh. The wind chill on your wet clothing numbs you to the bone. Then the hazardous climb out along the spars to anchor oneself and to start pulling up sail to be lashed in. Painful, frightening and very dangerous work. Climbing onto the upper spars on such a ship when tied up alongside on a warm and windless summer’s day is a daunting prospect for most people. To do this under a heavy Southern Ocean swell takes rare courage. In this of course, the analogy is thus: it will take a rare political courage to reform the Euro and for the politicians in the PIGS to admit defeat. It is essential that this courage is found and acted upon however.

    Eurozone leaders must realise they cannot outrun the storm any more than the SS Brighton was able to summon up enough speed to avoid colliding with the Preußen.

    It is therefore essential that the leaders of the nations outside the EU must insist on a candidate from a non Eurozone country and someone who is not dedicated to keeping the Eurozone at its present unsustainable size.

    There are some good candidates:

    - Trevor Manuel, of South Africa: Manuel, 55, a former South African finance minister, now leads the country’s National Planning Commission.

    - Agustin Carstens, of Mexico: Carstens, 52, an economist educated at the Univesity of Chicago, heads the Mexican Central Bank. He has served as a deputy managing director at the IMF.

    - Arminio Fraga, of Brazil: Fraga, 54, a Brazilian economist with a Ph.D. from Princeton, served as president of the Central Bank of Brazil from 1999 to 2002. His investment company, Gavea, was acquired by JPMorgan in 2010.

    - Min Zhu, of China: Zhu, a special adviser to the managing director of the IMF, formerly served as a deputy governor of the People’s Bank of China.

    - Montek Singh Ahluwalia, of India: Ahluwalia, a Rhodes scholar with a degree from Oxford. He directed the IMF’s Independent Evaluation Office from 2001 to 2004 and has held many economic government positions in India. He is currently deputy director of India’s National Planning Commission.

    - Tharman Shanmugaratnam, of Singapore: Sharmugaratnam was recently named deputy prime minister of Singapore. He has served as the country’s finance minister and education minister. At a press conference, Sharmugaratnam dismissed suggestions that he was interested in the IMF post.

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