For more than a year I have been arguing that the peripheral countries of Europe should leave the Eurozone. It was a political creation, without the wherewithal to adapt to the various and changing needs of the peripheral members. We are finally seeing that come to fruition with a vengeance. From my point of view the only question is how do you handle the dismantling of the Eurozone.

All of them will be better off in the long-run not being tied to France, Germany and the Benelux countries. Since social cohesion is lacking in a number of these peripheral countries. The only way these countries historically dealt with crises was to use the exchange rate and interest rates, something even the least-educated peasant understands.

I would argue that these governments should just do it by decree overnight. The longer they wait, the worse the problem will get and the more costly will be the solution.

Most people don’t know it, but years ago, before Argentina defaulted, a major investment bank had put together a plan to avoid default, that in my opinion would have worked for quite a few years. What stopped the plan from being put in motion was political dithering on the part of the authorities. That’s what we have in Europe now. The countries which have tied their currencies to the euro should immediately free them up and let them freely float. The countries on the periphery should leave and recreate their own currencies in a blitzkrieg manner.

Italy and Spain will move to large current account surpluses. Small enterprises will compete with even the Chinese. Ireland will be the UK’s Cayman Islands. It’s quite simple. Simplicity, not Cartesian dreams of grandeur are usually best for the economy. We are getting Cartesians thinking too much and wasting time contemplating nature of the universe while Rome and Madrid literally burn.

Tags: exchange rates, greece, Ireland, Italy, Portugal, the Euro