Telegraph Sells The Euro Pass

Another day, another hole shot in the credibility of the Maily Telegraph by its own hacks, and as so often, the EU is the catalyst. Such is the drive to push the line of “EU/Euro/ECHR/Brussels/A N Other Euro-Institution bad/finished/failed/undemocratic/unelected” that the cracks in the edifice are becoming positively gaping. Anything on the subject is seized on and shaped to fit the agenda. The paper is moving from being a broadsheet Daily Mail to becoming a serious person’s Daily Express.

And those hacks are either happy to see their credibility sprayed up the wall – unlike the Daily Mail, everything at the Telegraph has someone’s name on the by-line – or they have become resigned to take the money and keep schtum. Today’s freshly steaming example is the front page lead, “Euro was doomed from the start”, which features apparently authoritative quotes from Jacques Delors.

The former European Commission (EC) President had, after all, given the paper an interview, so one might think he really said that. But experienced Telegraph watchers will not be at all surprised to learn that he didn’t. Delors actually said that there was “a fault in execution” of the single currency, which not only the BBC but also the Mail have translated as “flawed”.

Which is a pity, because Delors provides interesting insights into the genesis of the Euro, as well as observing – which we already knew – that the economies of Eurozone countries did not “converge” as closely as some believed, and that every member state including Germany broke the budgetary rules. Moreover, there was much less than responsible lending by banks across the Euro area.

And what Delors also highlights is the German reluctance for the ECB to be a “lender of last resort” for the Eurozone, something I’ve discussed previously, telling that problems come from “a combination of the stubbornness of the Germanic idea of monetary control and the absence of a clear vision from all the other countries”. In this, he is literally right on the money.

Delors is also right that there has been too much last minute action – something that will not win the confidence of the markets – and that it hasn’t been enough. There has been one event after another where the can has been kicked down the road. German calls for closer “fiscal union” won’t suffice, and history tells us so: the bank runs and panics in the USA only stopped with the creation of the Fed.

In other words, a “lender of last resort” was created, and thus the States had an institution on a par with the Bank of England. The markets know where the Buck and Pound stop. Only when the ECB assumes that role for the Euro will the markets settle, and Delors is saying just that. It’s a pity that the Telegraph diminished the effect of their interview with another clumsy agenda driven headline.