By Robert Folsom | November 10, 2011
A major political website in England recently ran a story with this headline.
“Thinking the unthinkable: Treasury admits planning for euro collapse.”
Ponder the word “admits” — and how its use here connotes the way a guilty person admits to a grievous sin. In fact, her Majesty’s Treasury went beyond thinking about the unthinkable… and actually planned for it.
Mind you, the unthinkable must be easier to consider in the United Kingdom, which does belongs to the EU yet opted out of the euro currency nearly 20 years ago. In those countries which really should plan for the euro’s collapse – because it is their currency — Germany, France, Italy, etc., the unthinkable remains exactly that.
Everyone knows that you don’t have to see the beast if you keep your eyes shut. Once you open them you can’t not think about it.
Their denial is understandable. Europe’s economic and monetary union was the world’s most epically bullish political event of the entire post-WWII period. The politicians and policymakers now in power belong to a generation of Europeans who believed their new union and currency would be a perpetual source of strength and stability.
But that leadership was oblivious to the decisive role that positive social mood played in forming the European Union. And today they are just as ignorant of the hugely destructive negative mood that has been in place since 2007 – especially its role in the undoing of their union and currency.
From where we sit, none of this was unthinkable — not before, not during, and not now at the beginning of “after.” If you grasp the predictive role of social mood, it was all entirely predictable indeed.
This comment from Bob Prechter published a few months before the launch of the euro:
By May 3, most of the countries in Western Europe were expected formally to join Germany in actions that would “irrevocably bind their currencies together.” Since joiners will not be allowed to leave, this is a rather strong expression of inclusionism, as well as a setup for future conflict.
—Elliott Wave Theorist, May 1998
Below is another contrarian analysis of the European Union, which published in early 2004 — when the euro was widely consider a success and had been in a strongly bullish trend for more than two years.
On a longer-term basis, how do you keep a currency alive if and when people come to distrust the very Union that created it? …. People who lose trust in their institutions don’t sit at home and ponder the future sipping fine wine or even beer. They protest raucously. They destroy the political order then in place. They come to prefer separation…
—Elliott Wave Theorist, March 2004
In December 2009 (some three months before the riots began in Greece) The Socionomist published a cover story titled, “The Developing European Tinderbox.” It discussed the economic turmoil of the United States in the late 1850s — just before the Civil War — and said “an equally perilous period is coming to the European Union soon.”