It is snowing in hell and the drifts are already getting deep. That’s the only way to explain the astonishing remarks of Poland’s foreign minister, Radoslaw Sikorski, on the eurozone’s desperate condition. How bad are things? Consider this:
What, as Poland’s foreign minister, do I regard as the biggest threat to the security and prosperity of Poland in the last week of November 2011? It is not terrorism, and it is certainly not German tanks. It is not even Russian missiles, which President Dmitry Medvedev has just threatened to deploy on the EU’s border. The biggest threat to the security of Poland would be the collapse of the eurozone.
I demand of Germany that, for its own sake and for ours, it help the eurozone survive and prosper. Nobody else can do it. I will probably be the first Polish foreign minister in history to say this, but here it is: I fear German power less than I am beginning to fear its inactivity. You have become Europe’s indispensable nation. You may not fail to lead: not dominate, but to lead in reform.
Sikorski is not alone in his view. As Shaun noted yesterday, the fear of a euro collapse is palpable, and all eyes are turned toward Germany to save it.
The question becomes whether they want to take the job. It’s not clear that they do. Riding to the rescue of Europe’s wastrels would damage Germany’s economy, driving up its borrowing costs and giving euro-skeptics within Merkel’s coalition fresh arguments for pulling the country out of the union.
But ditching the euro may be the only way out. And some advocate the “rip the band-aid off” approach:
…Hans-Joachim Voth, an economic historian who teaches in Barcelona, feels that the euro’s days are numbered. He considers it advisable for economically strong countries like Germany to withdraw from the euro, because, so he argues, “not every stupid economic idea has to be defended to the bitter end.” In theory, says Voth, the upcoming Christmas holidays could be a good time to take this step, because, as he argues, it’s important to take the markets by surprise.
Markets dislike surprises. One this big, and on this schedule, could turn that sleepy week between Christmas and New Years into days we haven’t seen since the housing bubble burst.
No wonder the Polish foreign minister is so edgy.
