The Real Tragedy Of The Euro

Tyler Durden's picture

The realization that the European debacle is much more an issue of political harmonization and Empire-building than one of pure economic band-aid provision should be clear to any- and every-one who has followed the words and deeds of the various European factions for the past year or two. Yesterday, we discussed the dithering and competing camps but what is really critical is to understand how we got here and what the underlying social and political wills are among all of the players. There is no better summation of the formation, driving forces, and tensions among European leaders and central bankers than Phillip Bagus' 'Tragedy Of The Euro'. From the simple divergence of the dual visions of Europe with northern libertarians and southern socialists to the Bundesbank's fearsome reputation for showing up weak governments, Bagus offers a clear perspective on why the EMU is a 'self-destroying' and 'conflict-aggregating' system but counters that with some views on what the outcome will be and how French governmental pressure remains the cornerstone of the establishment of a European Empire for better or more likely for worse.

The Tragedy of the Euro explains why the Eurosystem almost collapsed in May 2010 when the Greek sovereign debt crisis spread to other PIIGS countries.

It explains how the system creates money out of nothing and creates perverse incentives for governments that lead to its own destruction. Without a reform, the Eurosystem is doomed for failure.

Beside the European monetary institutions, the book also describes the political interests behind the euro. The single currency was an important strategical tool in the plan of European socialists. It served to get rid of the Bundesbank and the DM that served as brakes on European inflation.

In his conclusion, Bagus points out that:

The institutional setup of the EMU has been an economic disaster. The Euro is a political project; political interests have brought the European currency forward on its grievous way and have been clashing over it as a result. And economic arguments launched to disguise the true agenda behind the Euro have failed to convince the general population of its advantages.


The Euro has succeeded in serving as a vehicle for centralization in Europe and for the French government’s goal of establishing a European Empire under its control—curbing the influence of the German state.

...and in response to what the future will bring for a system whose incentives destine it for self-destruction, he sees three possibilities: first, the system will break up; second, the Stability and Growth Pact (SGP) will be reformed and finally enforced; and third, incentives toward having higher deficits than other countries will lead to a pronounced transfer union. In the current crisis, it seems that governments are hovering between options 2 and 3 - what scenario will finally play out is anyone's guess and with Greece's March deadline looming, perhaps now is a good time to read and understand what is really at stake for the Eurozone.


The book has been generously released on pdf by The Mises Institute:


Comment viewing options

Select your preferred way to display the comments and click "Save settings" to activate your changes.
Mongo's picture

Tyler, just admit it, at least we got a good laugh out of the Euro... especially thanks to WilliamBanzai7

Silver Bug's picture

Good article, I will quite surprised if the Euro survives in its current form through next year.

Oh regional Indian's picture

In this whacky world we inhabit, a Political Union would have been much easier to hold than this crazy monetary one (especially with England getting Hanging Chad status, very suspicious, all the benefit, none of the price?)...

No major war action till march, so looks like politics and money will continue to have center-stage for a little while longer.



MillionDollarBonus_'s picture

The tragedy of the Euro has been a complete lack of leadership and sound governance. Europe has been blessed with one of the most iconic leaders of our time, President Herman Van Rompuy, who has worked tirelessly to promote fiscal and monetary union. However, his efforts have been met with childish discourse and indecision from national leaders and cold indifference from the European citizenry. This saga has gone from tragic to pathetic, and I pity those who still fail to show any interest in creating a truly united Europe.

Azannoth's picture

Makes me wanna PUKE everytime I glance over what you write(I guess I won't do that anymore)

BaBaBouy's picture

GRANDICH Raises His GOLD Wager Offer ...


Having not thoroughly spooked all the horses with that first bet, Grandich has today raised the ante, directing all of his ire at Nadler and challenging him to another bet, now $2 million, that gold will hit $2100 before it hits $1000:

I hereby challenge Mr. Nadler again, this time raising my wager to $2 million — still not anyone’s “life savings.” I’ll increase the bet’s target price by $100: that gold will see $2,100 before $1,000. The winnings are to be donated to charity.

It’s a shame that someone can continue to be so wrong without being questioned. When Mr. Nadler resorts to misrepresenting me, it’s time for him to put up or shut up.

If Mr. Nadler’s forecasts have been so profitable to him and his readers, why wouldn’t he accept this challenge?

I have arranged for the law firm of Lomurro, Davison, Eastman & Munoz of Freehold, New Jersey, to hold the wagered funds in trust. My offer to Nadler is good until 12:01 a.m. ET January 9, 2012. And since my side of the wager is derived from my personal funds, Mr. Nadler’s $2 million match to my wager shall also be certified as deriving from his personal funds or funds derived from the assets of his immediate family.

BaBaBouy's picture

"" Europe has been blessed with one of the most iconic leaders of our time, President Herman Van Rompuy, who has worked tirelessly to promote fiscal and monetary union. ""


Ha Ha Ha Ha Ha, NOW Thats Fucking Funny...


(Who Says Tyler's Site Is Always TOO Serious...)

Dugald's picture

AFTER Jan 9 1000 ???????

macholatte's picture

MDB is really Keith Olberman


WonderDawg's picture

Van Rumpoy is a clown that looks like a pedophile with a drinking problem.

jacekp5's picture

MillionDollarBonus_ hahahahhahahah U just made my day :) hahhahahahahahah

bigerny's picture

Makes me feel good just to stick a red arrow up his ass.

AnAnonymous's picture

Good article, I will quite surprised if the Euro survives in its current form through next year.


Be surprised right now because US citizens love surprise. So instead of being disappointed by your own sham, be happy right now.

It will be no surprise the Euro is still next year.

Schmuck Raker's picture

I can't believe someone's actually paying you to post this stuff.

Potemkin Village Idiot's picture

I will quite surprised if the Euro survives in its current form through next year

I'll take the other side of that bet (with a hedge)...

The Euro is (was) always a NWO construct... It represented the first stepping stone to a "one world currency"... TPTB aren't going to let that dream die without a fight...

So THE HEDGE I refer to is where you say "in its current form"...

As all PUSSY 'elites' are prone to do, they NEVER ADMIT FAILURE... They just strip out what parts appear to still work, package it back up, and re-sell it to the public... Euro:Gold is the "proxy du jour"... THE EURO isn't a "widget" & this ain't your grandaddy's capitalism... It's not going to die until they're ready with another IDEA... I'm not sure they're ready with a new idea just yet... Perhaps they thought "Barry" would buy them 8 years of time but it's not working out... & Ron Paul is kind of messing things up at the moment...


Captain Kink's picture

I just read the frist 30 pages of the book, and man is this a great read.  The ultimate and only question is whether Merkel will sell out her people and their future for the benefit of the profligate governments of club med (and France).  The socialist future of Europe benefits, in a (Ayn) Randian sense, those who will never produce at the level of the real engines of Europe.  If Merkel cares a whit about her country, she will elect to leave this whole sorry experiment behind.  This is really their last chance to divert from the Central state, socialism forever model that the less disciplined states should be clamoring for.  I used to feel sorry for the people of Greece and the rest, as I believed that Germany would be the beneficiary as they would ultimately be in control...and that the citizenry of the profligate states would not have any say over their loss of soveriegnty.  the truth of the matter is that under one European fiscal and ultimately national govt, a Spaniard, or Greek or Italian will be able to while away the afternoon taking a nap or watching pretty girls go by outside the sidewalk cafe while his "countrymen" to the north produce engineering marvels and real products with value.  The whole thing is F-ing nauseating. MERKEL/DEUTSCHLAND SHOULD QUIT THE EURO.  BRING BACK THE DM.

Ghordius's picture

"...dual visions of Europe with northern libertarians and southern socialists..."

this sentence is a perfect example for the fact that our dear Yank cousins just project the US political and social paradigm on Europe - not understanding the real political environment of the EU and the EZ.

Mix some UK anxiety on France "getting back to imperialism" and the angst of the resurgence of the Third Reich and the mix is perfect.

I'm laughing myself silly about any Finn or Swede or German realizing they are seen as "typically or majority-wise" libertarians.

Libertarianism - and I'm talking here as an avid follower of the Mises Institute - is an American "Brand" of the Classical Liberal tradition.

I know, I know, in the US the liberals are what we usually call the socialists or the social democrats. Call it another form of American Exceptionalism.

Seriously, friends, get a grip on reality. I read this comment "Good article, I will quite surprised if the Euro survives in its current form through next year."

next to it, a link to the blog ""


He has a very good book out about the Currency Wars - and NOTHING in it is about this UK/US fancy of a "breakup" of the EUR - in the way you get this idea across.

I quote from the blog "Awkward how the British press keeps bashing the euro when the next crisis is the sterling. - Jim Rickards, Twitter Update"

Or here, an interview where he wraps up his book

Please, you have now made so much easy-to-digest-and-therefore-simplified-anti-FED-propaganda that you simply equate Europeans with your US liberals, the ECB with the FED, the EU northeners with your libertarians, the EU southeners with your socialists/liberals, the current currency war as a conspiracy against US citizens, and so on.

Even Bagus says at the beginning "this is the only Austrian/Libertarian book - that is the Austrian School reflects a theory valid for the whole human species while the libertarian part caters to your tastes.

Perhaps you do need a veil over your eyes? Or is it really that much effort to aknowledge that you are not the whole world and that other continents tick differently? I don't know. But it looks really, really silly - a bit like calling a Football trophy the World Cup (or whatever it's called) when there is only one country playing football in this exceptional typically American form.

GeneMarchbanks's picture

Some sweet-ass colors on those notes though, you gotta admit.

redpill's picture

We'll always have


Urban Redneck's picture

I'm shocked, shocked to find that gambling is going on in here!

DoChenRollingBearing's picture

@ Gene

+ 1

And I have always liked those colors on the 500 Euro note...

SAJ's picture

Gene -- Not as sweet as you might think.


The original red coloured dye on the 10-Euro note turned out to be an allegen for approximately 9%  of the population, and outright toxic to about a third of that 9%.  The most prominent of the early sufferers, unluckily for the Eurocrats, was the lead partner in Germany's largest tort law firm.

Setting an all-time record for speed in a bureaucracy, it only took ECB 3 weeks to designate a new dye and reprint the tenners.

Also, the 1- and 2-Euro coins as issued originally had a high enough nickel content to trigger nickel allergy in roughly 8% of women and 6% of men.  The amount of nickel in these coins was quietly reduced in 2003. 

There were an unbelievable series of screwups in the creation of Euro coins and notes, including but not limited to copyright infringement, frangible coins, duplication of size & weight, coins too small to handle effectively, and easily forgeable holograms.  And then there's the story (quite true) of the robbery of approximately E 0.4 million by dint of some clever chaps taking a crane and wrecking ball to the roof of a Bologna bank, then climbing down the chain and helping themselves, a couple of weeks before the Euro was to begin circulating.

Squishi's picture

a political project living on the economic projects! 

redpill's picture

It is enough that the people know there was an election. The people who cast the votes decide nothing. The people who count the votes decide everything.

--Joseph Vissarionovich Stalin

Potemkin Village Idiot's picture

That wasn't actually a STALIN quote... It is debatable WHO actually said it, but it is assumed to be a paraphrase of some thoughts that were eventually credited to Stalin...

Nevertheless... Touche' (it's always been a great line)...


bank guy in Brussels's picture

Apparently authentic from Stalin -

"You know, comrades," says Stalin, "that I think in regard to this: I consider it completely unimportant who in the party will vote, or how; but what is extraordinarily important is this - who will count the votes, and how."
Joseph Stalin, quoted in 'Memoirs of Stalin's Former Secretary' (1992), by Boris Bazhanov

Mercury's picture

Bagus offers a clear perspective on why the EMU is a 'self-destroying' and 'conflict-aggregating' system...

...when it was supposed to be a conflict eliminator. It's like a giant CDO of social and cultural relative pathology except that the countries who thought they were in the top tranche suddenly discover that they're the ones who eat shortfalls first.

Shit, tiny Belgium, the capital of Euro-harmony, can barely hold itself together as a country. All so clear in retrospect.

Looks like culture and tribal ties matter after all and news of history's demise has been a bit premature.

Whoa Dammit's picture

The bigger they are the harder they fall...Or the harder they come (Jimmy Cliff)



WonderDawg's picture

The Euro came into being near the peak of the world's most pervasive bull market (optimism/hope), and will be destroyed in the world's most pervasive bear market (pessimism/fear).

11b40's picture

"..the countries who thought they were in the top tranche suddenly discover that they're the ones who eat shortfalls first."

Just like the old story about owing money to the bank.  If you owe the bank $10,000 and can't pay - you have a problem.  If you owe the bank $10,000,000 and can't apay - the bank has a problem.  The promblem has not gone away for you, but you now have company in your misery.

Mayhaps we soon re-learn what all our old tribal instincts are really all about.

Ropingdown's picture

Being neither for nor against the Euro, I have found the arrangement a contradiction of its intended purpose.  It was supposed to unify Europe?  What could more thoroughly divide Europe into two opposing factions with the Germans leading one side and the French the other?  How could Germany possibly stomach it when France organized the Portuguese, Spaniards, Italians, and Belgians into a block to throw repeated proposals for a Euro-bond forward despite Germany refusals?  What is worse is this, that no solution will leave Europe peaceful, harmonious:  If the Germans withdraw or force others out, the bitterness will be enormous.  If the Germans are coerced into a transfer union, the voter rage in Germany, Austria, and the Nederlands will never end.  The hate and resentment are guaranteed to follow in the wake of either path.  Awful.  Just awful.

vegas's picture

The real tragedy of the euro is the subrogation of individual sovereign states to the apparatchik elites who sit in Brussels and tell them how to live their collective lives all the while skimming the countries treasury for vast sums of money. Like most governments out of control, if this happened in the private sector there would be lengthy prison sentences.

The likes of DSK. Rehn, etc. make me sick. These guys couldn't run a fucking hot-dog stand, yet somehow in their hubris, they think they can centrally plan the world. This is a sick tragedy and the people of Europe are the true losers at the hands of banksters and politicos.

disabledvet's picture

What happened TD? Has our Revolution passed us by? Are our Days of Rage now devolved to Days of Sage? Instead of Storming the Barricades must we be content with Twirling Candycanes in Our Hot Cider? Where is the angst I ask you! Where is the total loss of inhibition? To the triumph of the Supercilious! Happy New Year Everybody!

Oh regional Indian's picture

To the triumph of the supercilious may I add the victory of the vapid?

Happy Renew year to you.


Piranhanoia's picture

I thought the northern most Euro nations were the only ones with real democratic/socialist governance.  Norway, Sweden, Finland, Denmark, Germany, Netherlands.  All these nations are keeping their social network and jobs.  

The southern ones are more into bribery and controlled by the religion business.

 Guess it is no secret that democratic socialism is the only stable form of governance and the onlyone that offers any democracy at all.


AnAnonymous's picture

I thought the northern most Euro nations were the only ones with real democratic/socialist governance. Norway, Sweden, Finland, Denmark, Germany, Netherlands. All these nations are keeping their social network and jobs.


What you think is irrelevant. What is is irrelevant.

What matters is what kind of propaganda this US citizens audience wants to read and pays for. Demand, offer.

Yes, better to read that northern european countries are libertarian rather than being blind.

Comply with the Ministry of Truth or begone.

US world order.

bombimbom's picture

finally two people who make sense... I was lost amid big LOLs and astonished incredulity reading most of the comments.

Ropingdown's picture

I can only speak to the Swedish experience, but your line of reasoning, that only social democracy works, is meaningless.  Only democracy works.  The Swedish budget and debt are in such good shape only because voters acceded to reality beginning in 1989-90-91.  They cut taxes, provided escapes (capitalförsäkring), lowered rates for financial income, and so forth.  They put pensions on a sounder "you get out in accordance with what you put in" basis.  They forced banks to become more responsible.  The confiscation of wealth no longer was the purpose, but rather the growth of an economy while preserving public goods, health and education. The values are democratic. The socialism receded.

bombimbom's picture

"preserving public goods, health and education" ... ouch, you showed your ugly european socialist face! you showed you care for the society. you eurocommie. see, society - social welfare - socialism. repent!


Ghordius's picture

tell this bastard eurocommie we won't relent until the Swedish poor are hungry on the streets

I can't savor my filet mignon with champagne if they have some social security net rewarding them for nothing

Ghordius's picture

LOL - you are getting there, but sideways

the typical european setup is the product of compromise between several political parties. that's the real difference to the US - where we typically have some four to ten parties, you have two

just too much US "projection", I would guess...

lookma's picture

Hmm, a whole 160 or so pages about the Euro with no mention of its most important asset, its marked-to-market gold?

And he's an "expert?"




DoChenRollingBearing's picture

+ 1

The report missed a biggie!

NotApplicable's picture

Why would anyone believe that any sovereign still holds gold? I would assume it's all been stolen by the private CBs by now.

Potemkin Village Idiot's picture

That's what "DECOUPLING" means my friend...

On one hand, you have reality... On the other hand, you have "managed perception of reality" (during the process of theft)...


Potemkin Village Idiot's picture

Hmm, a whole 160 or so pages about the Euro with no mention of its most important asset, its marked-to-market gold?


Bingo... We have a winner!