This picture is wrong on so many levels (German Chancellor, Swastika Cookies, Gas oven) but the audacity of it captures the tension in Europe at the moment. (May 9th was European Union Day)
The Germans, hard-working and terrified of hyper-inflation, want a strong currency, and are fed up of being the engine which makes low interest borrowing possible for the profligate Southern tier of the continent (Greece, Cyprus, Italy, Portugal, Spain…… maybe France), and especially cannot stand being blamed for the dire straits which the southerners find themselves in.
The Southern nations, and to some extent, France, are drowning in social obligations, and their exports are uncompetitive – they need to print money to cover their debts and devalue their currencies, however, having signed the Faustian bargain which is the common Euro currency, they cannot print their own money, and they cannot devalue to make their exports competitive, unless the European Central Bank prints even faster than they are already doing.
It is these tensions which lead a number of economists, and even one of the architects of the common currency, Oskar Lafontaine, to call for the Euro to be broken up so that the economies of southern tier can recover.
The alternative to breakup is ever-closer banking and governmental union, with attendant loss of sovereignty for the members. Meanwhile, the Germans, whose exports are competitive already, Dankeschön, only need to say “Nein” to requests for more bailouts, and the ailing members will go under. Hence the pessimistic views are that either (A) the Euro cracks up, or (B) the Germans own most of their asses, without a shot being fired!
See the whole span of grimly funny graphics and limericks here.
Meanwwhile – more European nations are souring on the whole Euro project.