 First of all, thank you for inviting me. It's a pleasure to be here today in Dublin. I can start where James ended, namely, what cannot go on will end. And that's true, that's the same message that I have. I will illustrate this message in a bit different way, namely changing, so to say, the acting countries a bit by looking at the bigger countries, by looking mainly at France and Germany. But let me give you one anecdote I have to tell you, because James is here. And when I met last time Alexis Tsipas, still Prime Minister of Greece, at James's place in Austin, Texas, some two years ago, we were talking about the question, what is going to happen if Alexis Tsipas would become Prime Minister of Greece? And he said, yes, well, he was enthusiastic. I would go to Berlin, and I would go to all the countries and tell them, well, now we're here, we're a new left-wing government that were going to change things. And I said, yes, so the Germans will be impressed. You go to Berlin, and you say, I'm the Prime Minister of a left-wing, radical left-wing government. I'm going to change everything, and what will they do? They will laugh at you. That is what I literally said. I said, they will laugh at you. Because why should they change? Germany has no reason to change. You see, this is the logic of the eurozone. Unfortunately, it evolved like that. It was not a big plan. It was no conspiracy or something like that. It was more an accident that happened. The Germany is in a position where it doesn't have to change at all, or it looks at least as if it doesn't have to change at all. In the end, this will be disastrous for the eurozone, but Germany for the moment is in a wonderful position. It's relatively doing best in economic performance. It's not doing well. Germany is stagnating since four years also, but it's better than the rest. France is in a recession. Italy is in a bad recession. Maybe I show some charts. I hope you can see that. Industrial production in Europe, well, for some countries, for Germany, you see since 2011 not much happened. For Italy and France, it's a plain disaster. And for the euro as a whole, it's a stagnation. So Germany is doing well in terms compared to the others. If you look at southern Europe, the disaster is even more dramatic because nothing happens at all, although they're at a very, very low level of industrial activity, but it's the same if you look at construction, whatever you take. But you see the crucial point is unemployment. You see the crucial point is unemployment. If you look at France, France is the green line, has an unemployment of more than 10%. Italy is the yellow line, has an unemployment of more than 12%. Look at Germany, the blue line. Germany has very low unemployment. You see this happens if one country exports its unemployment. One country in the eurozone has exported its unemployment to the others. And this is the result. Yeah, I'll show you in a minute why and how they did it. You see and then now in the eurozone that there's no solution for that. If we were still in the European monetary system, what would everybody say? Whereas we're simple like that, everybody would say, well, the ones have to depreciate, the currency, the others have to appreciate, then it will be fixed in one way or the other. But that's impossible and all the other ways are also absolutely unsustainable and untenable. So, but overall, we also have deflation in Europe. You see, we have in Europe, we have high unemployment, we have deflation, we have no growth. It's wonderful performance. It's the greatest economic performance in history in negative terms that we have since the 30s of the last century, so to say. And, but nobody talks about it. Does anybody in Germany talk about it? I can tell you I'm living in France, but I'm reading nevertheless to every day the German press, nobody talks about it. Germany, everything's fine. No problem. We're well off, no problem. And this will destroy the eurozone sooner or later. You see, I don't want to go into Greece because James has been talking about Greece, the Greece performance in the first years of the eurozone were excellent, you see. Greece grew more than Spain and had no bubble and no housing bubble like Spain. But then came the collapse and all the rest. You see, if you compare Spain with Germany, you put it to an index, 99,100, and you put the cycle, look at the cycles, you see up to 2010, 2011, Greece was a normal country. But then the Troika took over and they destroyed it, country. Why did they do that? Just to destroy Greece or what? No, they applied the recipes that Germany thinks are successful. Germany strongly believes, the German politicians strongly believe they're not trying to destroy Europe. No, they strongly believe that their recipes are successful because they were successful in Germany, you see. From the beginning of the eurozone, Germany did what it is asking now the others to do. The problem is what one person can do or one country can do cannot be done by all the others. One of you can stand up to improve your view of my PowerPoint, but not all of you can do that. And this is the problem, you see. This is the very simple problem. In English you call it a fallacy of composition. A fallacy of composition. One country can do something, it can be successful, but if it asks all the other countries to do it, exactly the same, they cannot be successful. And this is exactly the case in the eurozone. One country can cut wages, as Germany did, I'll show it in a minute. But if all countries start cutting wages, well, it doesn't lead nowhere. I can give an Irish example if you want. One country can have very low taxes for companies, but if all countries have exactly the same low level of taxes, it doesn't help anymore. You see, it's always about relative advantage. You can have a relative advantage, or an advantage, relative advantage is a contradiction, I think. You can have an advantage, but not everybody can have an advantage against everybody. That's impossible. And this, I can tell you, German politicians will never understand. If Angela Merkel talks about improving competitiveness for everyone, she believes that strongly. She believes that everybody can improve competitiveness. Everybody cuts wages, as Germany did. Everybody will be successful. Just nonsense, we know. Everybody reforms, and everybody flexibilizes the labor market, everybody will be successful. We also should know that it's nonsense. You see, the point to be made is very simple. You have, from the beginning, one important problem in the eurozone. The main problem is, from the very beginning, from master treating in 1993, that everybody in euro believed in monetarism. Everybody believed strongly that if you control money supply in one way or the other, like Milton Friedman others have told us, then you have no problem with inflation. Then inflation will be fixed and forget about the rest. Unfortunately, that's wrong. Monetarism today is dead. No major center bank of the world believes still in monetarism. Monetarism is dead, as Milton Friedman said to say. But this was the core of the matter at the beginning of the master treaty. And that is why nobody thought about a minute about, and I was part of that process in 1990, I can tell you, I tried to make the others aware that we're doing something absolutely crazy. Nobody wanted to take note of the fact that inflation rates are not coming from money supply, but from wages. Unit labor costs, you see, this is unit labor cost for many countries. You could put Ireland in this exactly the same. Unit labor costs determine prices, over the long term at least. Unit labor costs determine prices. If unit labor costs determine prices and you have a monetary union with an inflation target of 2%, so what is the, what everybody has to do? Well, in all countries, the wages have to adjust to productivity in that country. And in a way that you have nominal wages to increase like productivity, national productivity plus 2%, because 2% was the inflation target that was fixed by the European Central Bank. You see, and now they have a simple rule for which country behave well and which country got it wrong. And now the answer is very simple. You see, you see the ECB target in the middle of the black line. And you see a number of countries in Europe, indeed, were living beyond their means. They were increasing their wages more than was asked for by a monetary union with an inflation target of 2%. You see, it was Italy, Spain and Greece. Ireland also a bit, but it's not on the screen unfortunately. But Ireland has a different history. Ireland has a different history of wage cutting and then increasing, so I don't want to go into that, but it's a bit more complicated. But for the rest of Europe, it's very simple, you see. And one country was living below its means. And that country is Germany. And only one country behaved exactly right. And that is France. Oh, you don't see it really. The red line is France. France was the only country that really stuck to the inflation target of 2% in terms of unit labor cost increase. And Germany went for an exercise of wage cutting, of wage moderation, however you call it. And under political pressure at the beginning of the 2000s, I was no longer than in the finance ministry. My minister had gone. So I had to leave also. At this moment, Germany started an experiment, so to say, in neoclassical labor market policies, they started to cut wages. Not with the attempt to destroy the monetary union in Europe. They didn't even think about the monetary union. Nobody thought about the monetary union. No, they wanted to cut wages because they thought if you cut wages, you increase employment and you reduce unemployment. Germany's unemployment at that time was quite high. So then came, you see, the monetary union would happen. Now you can accumulate. I don't know whether I have a pointer here. No, sorry. No, here it is. You see, this accumulated, the gap. If you have every year, Germany wages, wage unit labor cost increasing only by 0.5% in the French, increasing by 2%, you can easily calculate when French has a problem that cannot be solved anymore by any normal measures. And that was the case in 2008. In 2008, all the countries had, all the countries above the black line had a huge problem, but France also had a huge problem because France had a gap to Germany of something like 15%, 20%. And this is, so to say, the death sentence for the monetary union. It's simple like that. Because the only thing, you can only do two things. You could adjust Germany upwards. Germany's wages could increase now much more than the other countries so that after 10 years, again, or 15 years, they would be at par, the wage, the unit labor costs. Or the other countries can cut wages. But clearly Germany at that point already was a strong country in the Europe because it was a creditor country. And whenever you have a financial crisis, all the power from one minute to the other, so to say, shifts to the creditor countries because the deficit countries have trouble to get the money from the capital market as they got before. It's very simple like that. So the global financial crisis triggered the euro crisis, not the cause of the euro crisis. The euro crisis is much older than that. But it triggered the euro crisis and the outbreak of the euro crisis. And it triggered the move of power to Germany because now it was Germany that decided whether a country would get funds or not. And then comes the simple experience and the simple political thing, you see. And it is an old history. James knows it as well. If you look back into history, you never find a country that is in a situation like Germany. There's a surplus country that's doing relatively well. That's feeling as if they have solved all problems of the world and you tell them, you have to change. They would say, you're crazy. No, I don't know why should I change. Why should I change? Because you're in trouble, not me. The deficit countries are in trouble. And I should change, why should I change? You do as we have done. That is exactly what they tell everyone. And that's exactly wrong, you see. Because if everybody tries to do what Germany has done, we would end, first up, we would end in deflation. And some countries, but you see, some countries try to do it. You see here, Greece is the, it has the most flexible labour market of all countries, industrial countries in the last 100 years. It has cut wages by something like 30%. But what was the result of the wage cutting in Greece? It was not a reduction of unemployment as the neoclassical labour market theory would tell you. No, it was an increase of unemployment. Just the opposite happened. You see, let me have it somewhere, a wonderful chart. Here, see, this is absolute wages. Wages per a real wage of power in Greece. And if you look at this point, they cut wages by more than 20%, 27% or something like that. But exactly from that point on, unemployment in Greece rose, did not fall. Yeah, because the labour market is not the same as the potato market. That is what neoclassical economists tell us, that the labour market is behaving like a potato market. If the prices fall, more potatoes will be sold. It's wrong. Because labour has to buy all the other goods that are produced. Potatoes don't buy any goods, but labour has to buy all the other goods that are produced in the economy. And if they cannot buy them anymore, if you cut wages by 20%, the next day you have a drop in domestic demand of something like 20%. Because what else should people do? And if you have a drop in demand in domestic market of 20%, you are in trouble. Then you get rising unemployment. So this exercise that Greece has done cannot be repeated by any country anymore without, well, committing political suicide. And you see that there are two countries that would have to do it, according to the traditional theory, namely Italy and France. Even those countries would have, if Germany does not change, and Germany is not changing at all, why should it? Those countries would have to cut their wages by 20%, because they cannot go on like this, because they are losing permanently market shares in the rest of the world and in Europe against Germany. Any French product being 20% more expensive than a German product is going to be dead in the long term. Absolutely sure. But if they cannot cut wages and they cannot go on like this, so what then? You see, then it's over. It's very simple. There is no solution. If Germany does not change, there is no solution. Because if the French and Italian would cut wages, I can tell you who is going to be president in 2017, where there is election general election in France, namely Marine Le Pen. And in Italy at the beginning of 2018, I think they are going to vote it will be Beppe Grillo or Matteo Sivani from the Lega Nord. And then Europe is dead, you see. It's simple like that. If you cannot change the situation, and you cannot produce overall growth in Europe, so that it would taper over at least a bit this gap. There's no solution. It will be politically dead in a couple of years. If it is not in 2017, it's in 2022. It's not important. But you see, then here comes again the power game that we have to think about. Namely, if you, by the way, some people say, sorry, I was wrong. Oh, I shut it off now. Some people say, but France has, as someone said formally in the round, France has to adjust. No, France doesn't have to adjust at all. You see, this is absolute productivity in France and in Germany per hour. Perativity in France per hour is higher than in Germany consistently over many years. Why should a country with a higher productivity adjust to a country with a lower productivity? There's no reason for that. But this is exactly what is the outcome of the logic, the German logic of, if you accept the German logic of the situation in which we are. I look at, yeah, my time is running out. Give me three minutes. And in terms of the future of the power game, what is going on? Well, at this meeting with Alexis Sipers, I also said, I think I said it literally, I said, you see, if you want to negotiate with the Germans, you have to put a weapon on the table. Yeah. It is like that. It's politics. We're talking about politics. We're not talking about children games. We're talking about politics. If the other guy doesn't want to move and you want to make a move, you have to put something that makes him move. So I said, you have to put a weapon on the table. But unfortunately, Greece is too small. It doesn't have a weapon that would impress the Germans. So the only solution was from the very beginning for a government like the one we had in Greece, was to find allies to form a coalition, a coalition that would have a weapon that is big enough to impress the Germans. But this coalition never worked because France and Italy didn't want it. So then it was over. It was for Greece. It was over. No options anymore. But the only option for Europe to survive is really paradox because it is that such a coalition would be formed in Italy and France mainly and that they negotiate with the Germans about the future of the European Monetary Union and they tell them, well, here's our weapon. If you don't change, we opt Plan B for Plan B for exit. Sometimes you have to threaten someone. Even if you don't want to do it, you have to have a credible Plan B. But if you would do that, I can tell you what would happen. If Italy and France would be seriously incredibly threatened Germany and say, if you don't change your policies under these circumstances that we have, we're going to go out and we devalue our currencies that you can be sure. You know what would happen? They would change. Germany would change in a minute because we have a government that is totally relying on industry, on German export industry. If German export industry would understand that their market shares are under threat to be lost in a couple of days, not in years or so, as it would be if you would increase wages slowly. No, they would be lost in a couple of days or months. They would immediately stand in Berlin in the Chancellor's office and tell them, you change and I can tell you they change in a minute because this is the logic of this government in Germany of the Grand Coalition, even but of the Christian Democrats in particular, they do what German industry is asking for. So that is the only way that Eurozone can survive. It's paradox. You oppose Germany openly. It's the only way it could survive. If you don't do that, then it's also clear and I said it already what will happen. Those countries, France and Italy in particular that are in trouble without having done anything wrong. At least France has done nothing wrong at all. Well, they will vote for exit but a chaotic exit. They will find out that there is no way, no way in this Europe to achieve what every democracy has to achieve, namely jobs for the people and positive income expectation for the people. And if you don't have that, then as long as we have democracies at least, they will vote for the exit from the Eurozone sooner or later. Thank you very much.