 Thank you very much indeed for arranging this at such short notice to have a discussion with you. And indeed I have done a book, but that's really not the main reason for coming to talk to you. Everything is still going through a ffairly dire phase I would say, and I'd quite like to get a bit of a reading from people in Dublin about where they think everything is going. I have to say I'm not particularly optimistic about what's gone on in the last couple of years. felly, ydw i'n mynd i fyny'n ddweud y myfyrdd o'i ddoch yn femyn 5. Rwy'n gobeithio'n ddweud y ddweud, fe ddim yn ei ddweud. Rydych chi'n ddweud y dyfodol yma, ond rydw i'n gweithio'n ddweud y ddweud. Mae'n meddwl, mae'n ddweud yn fawr o'r rhagol, a'r yn argynnu ddweud. A maen nhw'n gweithio yma, o'r hyn myfyrdd ar y ddweud yma, o'ch cyfnodd yn dublun, felly mae'n tyfnwys yn gwneud yn fanrifel, ond rai'n ddwy'r bwysig a'r Comsyliaciool. Ac wedi bod yndod rwy'n dod yn gonyd. Efallai mae'n osbydd autyn sy'n gwneud. Rwy'n dda'r ddechrau newydd reiunau ar fy nid tyfnwys yr a'r Unig bawb yn defnyddio. A'r flwyddyn ar ddiwrnod honno'n g Overglowd. Rwy'n ddim yn gwybod, gweld edrych ac roedd yn gwybod. ac teuluwch. So dwi'n rhaid i ni'n meddwl. Mae'r ystyried, ac mae'r dylai'r unigwadol i'r eich bobl cynlluniaeth euchynig, fe sy'n gweithio'r wrthaid o'r bob ysgyrchu, a'r nigwadol i gweithio'r ysbytio gwych gan awl o reiswyl iaith, a gwisio a'r unigwadol i'r ffordd gweld yn y dweud o bethau o gyfrifiadau cael ei wneud yn y rhanau'r rhanau o bwysig, ac mae'r unigwadol i'r unigwadol i'r rhanadau, ..mall y dyfodol gyda'r pethau yma yn ymdae wedi ddysgu'r cyfnodau.. ..yna'r unig, yn ddifelodol, yn ymweld. Y ddweud y ymddangos yn ymddangos, mae'n ddweud yn ymddangos yn adeg.. ..yna ddweud y cwmpetitif iawn ac mae'r gwahanol yn y ddweud mewn ymddangos.. ..yna yn ddweud y ddweud. Y chyfl ymateb yma yn y cymdeithasol, ychydig yn blaenau.. ..yna eich bod ni'n ddweud ymddangos.. Mae'r gweld y teimlo i'r ffordd yng Ngheilio i'r ffordd yw ddweud ag yw'r bwysig, ac mae'r ddweud o'r gweld yw'r bwysig yn ymwetig. Mae'n dweud yng nghaelwch i'r economi Eirys yn y ffordd gwirio i'r mod yn ffordd gwirio i'r gwirio i'r gwirio i'r ffordd gwirio i'r gwirio i'r gwirio i'r gwirio i'r gwirio i'r wyrdd. Ond rwy'n cael ei fod y bod yn y bydd y bod yn y crofwyr, ni'n ystyried gydag yn gallu ffraith o hynny, ond ymwysig yn ysgolwyr. Rwy'n cael ei bod yn o-em-t, sy'n gweithio y mynd i'r drwng gwaith, rydych chi'n gilydd mor hyd yn gweithio'r blwf. Rydyn ni wedi bod yn llefyddau i'r brydau, a'r ddechrau sy'n gweithio'r cyffredinol. Ond rwy'n gweithio'n gweithio'n gweithio'n gweithio'n gweithio, Felly, mae'n gwneud o'r gwaith o'r lleol, mae'n ffordd, mae e'n gweithio i'r pwysig. Felly, rydyn ni'n ddweud ymweld. Felly, rydyn ni'n ddweud beth yw'r pwyllion, ddweud yw'r gwaith mae'n ddweud o'r blwff o'r rhain yn ddechrau. Cymru, yn yw'r ddweud, yw'n ddweud, bydd yn ddweud yma? Maen nhw'n gofyn ei wneud yw'r clywbeth a'u cyfnodio oherwydd mae'n ddweud oherwydd i'r cydweithio. Felly mae'n meddwl ffordd yn ymddangos yn ôl'n ymddangos gan Lywodraeth a Llywodraeth, ac rwy'n ddweud sut mae'r cyfnod ac yn ddweud yn Dynwr. Mae'n gwneud yn ymddangos i'r OBT. Mae'r gref yn ei ddweud yw'r amser yn ei ddweud. Mae'n mynd i'r Ministerio Ffyrdd, yn sou meddwl i'r ddweud yw'r cyfnod. I don't know whether the missiles in the silos are really ready for action, and even if they were, I think they may be a supreme court judgment against us pressing the button. Then it's not quite as bad as the defence secretary defecting to the Russians, but you can see what I mean of the Cold War. The Cold War metaphor I think is apt. It does actually take away something of the credibility, but because of the latest actions in the United States, or the idea that the Americans may be tightening, this has certainly come at an in opportune time. In terms of some lessons that we might have learnt from the last couple of years, I think one awful lesson is that it's been absolutely proven true that to make the European Monetary Union work, you do need a much greater degree of political integration and federation than we have up to now. This was said, of course, right at the very beginning, and therefore it's not a very original thought. But the terrible dilemma and the paradox is that just as it's become more obvious that that is what you need, it becomes less easy to do it, because there's been so much loss of faith in Europe everywhere, whether in the debtor or the creditor countries. Going from this position of really a very poor economic situation and massive unemployment throughout much of Europe, and also massive loss of confidence in the future, also among many young people, towards proper federal Europe, where those countries that want to be part of a proper union would do so has become enormously difficult. And that is, I think, the crux of the matter. I think we're seeing also the limits of technocrats in all this, the way that the Bank for International Settlements at their weekend report, which they always spend many months pouring over, making the point that central banks have already got very, very limited possibilities in all this to get growth going again. This copy is something which Draghi and his people at the ECB have been saying now for many months, do not overestimate the powers of the European Central Bank. Again, this flies in the face of one of the original parts of the construct, which was that the ECB would be very much at the heart of a kind of European growth machine. Certainly people in France very much believed all that. Another new point, which seems to be taken on board just recently, is that we're not going to go back to the very narrow spreads between stronger and weaker economies, or credit and debt countries that we had up until 2010, until the Greek crisis broke. Now, for me, that's not a very new point, because the Bundesbank has been saying that really for about four or five years. But it now seems to have worked through into the consciousness of many people, that even if we do get out of this very severe bout of crisis that we have now, the countries which have always in the past been weaker than Germany would continue to be held back by a rate of interest, which will be higher than the ones in the core. That goes very much against the fundamental contract of the euro, which was that you gave up your ability to manipulate your exchange rate. But in return for that, you've got a permanently lower interest rate. That part of the contract has now been breached. And I think that's quite a new state of affairs that people now are slowly coming to terms with that. Another thought which has now come through and permeated itself into the consciousness is that when the euro was formed, everybody thought it was their currency, but in fact they were wrong. It's nobody's currency, nobody's in charge, and it's a foreign currency. Very interesting to see the views of Spanish politicians, diplomats, technocrats. They thought that the European Central Bank might come to their rescue when they got into diastrates in, say, 2010-2011. In fact, the European Central Bank didn't see that as part of its business to buy up peripheral country bonds. And also they realised that they had been issuing debts the whole time in a currency which wasn't theirs. And this has now come out in quite a number of scholarly tracts by senior Spanish policymakers that they suddenly realised that it wasn't their currency. And once you give up your own currency and you're borrowing in somebody else's currency, you do give up a great deal of leeway. You can't actually manipulate that currency. It's quite clear that the ECB is not a central bank like anybody else. It can't do quantitative easing. It can't play around with the interest rate. The power of the European Central Bank is vested in this 23 man. There's not a woman there, so it is a man council, which remains astonishingly opaque and occult, and of course very anti-democratic as well. So we don't have a very good set up for governance. Another irony is that the whole point about monetary union, or one of the points, was to try to make Germany as harmless and as powerless as possible, and the Germans readily concurred with this idea. It was viewed as a good thing by the whole of the German political class, that the whole band working towards monetary union, which had been building up steam before the fall of the Berlin Wall, with the De Law report and all those things, should be catalyzed and accelerated. One of the reasons was indeed to try to emasculate Germany, to stop the Germans ever being a nuisance to anybody ever again. I always thought that was very fanciful to instrumentalise the currency in the interest of some overall political diplomatic endeavour. I really didn't like that idea at all. In fact, it's turned south because Germany is stronger than it has been for, I would say, the whole post-war era vis-a-vis France, and yet it doesn't actually want to be strong, it doesn't want to be powerful, it doesn't want to be in charge of anything. I don't think the Franco-German relationship will break up because it's extraordinarily symbiotic. The Germans need the French to cover up the fact that the Germans are actually quite powerful but they don't want the world to know about it. The French need the Germans to cover up the fact that the French have become extraordinary weak yet they don't want the world to know about it. You've got this huge psychological symbiosis which I don't think is physically healthy, but at least it's got a certain logic to it. The whole point about the euro as well was to try to promote the single market and to try to promote European trade and investment integration. That has really gone backwards. The Germans are now integrating with countries outside the euro area. Because of today's logistics and technology, you can transcend geography. If not by the end of this year, probably by next year, China will be Germany's most important trade partner, eclipsing France. Germany, as everybody knows, is doing massive amount of trade with countries outside. The amount of trade that all the big European countries are doing with each other has fallen, not just Germany. So, again, an irony of the whole situation is that rather than promote intra-European trade, it has done the opposite. Maybe the final irony is that the Americans, despite all their wrongdoings and all their full starts and all their manifest feelings in their own economic management, are still absolutely top dog. So the old idea, propounded above all by France, that the euro would somehow knock the donor off its perch at the top of the world stage has now been exposed to be a very shallow illusion because the exorbitant privilege of the dollar is alive and well and back with us. Just a few words now about this idea of a kind of reckoning. This is my third point. Now, I do accept that this is not the right time to have some sort of tribunal of the technocrats. And I do think it's the technocrats above all that do need to be named and shamed here. But I do think the monumental, almost criminal negligence and incompetence with which this whole setup has been developed does deserve to be looked at because this is akin to going into fighting a war with the army ill-trained, the generals arrogant and out of touch, the weaponry rusting and all the defence lines not brought up to scratch. This has been Europe's metaphor of the Maginot line. And what made it all the worse was the appalling complacency of the people in charge of this and not so much talking about the politicians because you don't always expect the politicians to really understand these things because they're just put in charge for a relatively small amount of time. You do expect the people behind it to understand the reckless incompetence and complacency with which this whole thing was described a shorter time ago was 2008. It does need to be looked at and in this new book, but also in my old one, I've listed quite a number of these cases. I won't get into all the details now. Interestingly, Mario Draghi, who of course wasn't really one of the select band of people who were actually in charge in the early years of Monetary Union, part of the time he was at the Treasury and then he went to join Goldman Sachs and then he only went to join the Italian Central Bank in 2005. He said some very outspoken things in his tenure as European Central Bank chief. He says far more in his speeches and his remarks in a few short words than Jean-Claude Trichet says in a whole month of Sunday sermons and Draghi has used the words the long complacent amnesia of all those actors at the heart of the European project. He was kind enough to comment on one bit of my manuscript. He told me he didn't mean to comment on Jean-Claude Trichet. He meant really the Eurogroup so I'm willing to accept that that was the criticism that was put forward. Another extraordinary statement. Again it's been completely on the record and it's been therefore it must have been commented upon but I find the new vice president of the ECB to forget all the six men. Again it's all men so I can say man, the six man executive board has all changed in the last two years he's more competent and more realistic set of people. He has said comprehensively that the faults in the construction of monetary union were not fiscal. It could be nonsense to blame the errors and the faults and the mis-turnings on the inability of countries to fulfil the stability growth. That's completely red herring. We know that from Ireland and Spain you were fulfilling these targets dramatically well in 2007, 2008. It was monetary. It was unbridled credit-fuelled boons in the peripheral countries driven by the ability of countries to burrow and live beyond their means. The European Central Bank in the form of Mr Constantia has now said this, black and white. So this is in a way the equivalent of when a change occurs in the Kremlin. An old set of slogans and an old set of shibboleths gets put to one side and a new set comes in. One of the points that I have criticised my good friend Mr Trichet and he knows this is that for about five years Jean-Claude Trichet regularly praised the fact that German and Greek debt was priced at the same level, the convergence of 10-year interest rates. He praised this in speech after speech so it was not a secret price and a great boon for 300 million European citizens. The European Central Bank has now revised the old doctrine that's all now part of past history. And they now officially say that was an invitation to moral hazard on a very grave scale. Which I think it was. So we've seen quite big sea changes in the last three years. I think there should be a tribunal of enquiry as I was saying but I think it should be done only when the most manifest signs of the crisis have disappeared and therefore I don't imagine that this will take place or could even be thought about seriously for several years. The Germanist position I've already alluded to I don't think it's any point asking the Germans to suddenly reflate their economy and produce an inflation rate of 4% and raise wages in order to bring the rest of Europe out of the mess. Firstly I don't think it would do any good even if they could do that. I think it would have all sorts of counterproductive effects. If you give the Germans more money by cutting taxes they tend to save more because they always fear the wolf coming down the road. The Germans act differently when they give them money they don't go out and spend it on those Anglo-Americans they save it. I didn't want to say that. Also it has been well proven that the Germans now do so little trade with the social countries that even if they did have a sudden increase in spending power it wouldn't really work its way through to the deficit countries. I don't think it's much point asking the Germans suddenly to agree Euro bonds either. I mean that's been done to death and not even France tries that on because firstly they think it's immoral and an invitation to moral hazard to share their debts and their credit standing with their neighbors and you can argue about whether they're right or wrong but that's the way they think and secondly they do think and I think they've got a point here that their own credit standing is pretty fragile. My point about the Germans is that whenever foreigners think they're on the whole strong they're weak and when foreigners think they're weak they're strong and there have been a number of cases going back to 1870 where this has been the case quickly after German unification Mrs Thatcher and Michonne both thought the Germans were going to trample over everybody else in jack boots. In fact they were relatively weak at the time when Chancellor Schroeder was doing his reforms I tended to think that the Germans were going to become stronger everybody thought that they were pretty hopeless at that time down to their last bratwurst almost accepting care packets from Britain so badly done by were they. So the foreigners always get it wrong I think the foreigners tend to overestimate German strength now and I think the Germans are actually in a pretty fragile state not least because they are owed 1,000 billion euros by the rest of the world having a lot of having a lot of claims on the rest of the world can sometimes be almost as bad, not quite as bad as having a lot of debts and I think the Germans in this uncomfortable position which is wholly their fault having got into this remarkably high credit of position and people won't pay them back so the Germans are not in the mood I think to ride to Europe's rescue. I don't think that we are going to go down towards a proper political union in my book I put forward a 10 point plan which you could say is just typical perfidious albion because clearly I don't think it's going to happen but I think if people wanted to have a proper monetary union they should have thought about this at the beginning many many people have said that many intelligent people that unless you have a proper political union monetary union won't work that's been the lesson of history for thousands of years so it's a common place to say that you should have a political union and I would say those countries that would like to do it should go on and do it to that extent. I do side with what I think both major parties in the UK say now what will happen next I don't foresee that this thing will come to any speedy ending I foresee a constant low level belligerency a little bit like in George Orwell's 1984 where there's a constant rumbling war going on nobody quite knows how it started nobody knows how the conflict is being prosecuted nobody knows how it will end the only thing that somehow unites the adversaries is the common view that neither will survive unscathed and I think that I'm afraid sums it up in the struggle that we have between creditors and debtors I don't think the Germans will leave the euro I don't think the outsiders will leave the euro still the key to large swathes of money coming their way I've said for several years that if Ireland wants to Ireland will stay in the euro and I've always thought the Irish people are strong and resilient and realistic enough to know that they had a party a few years earlier and now comes the hangover I think the Irish people are pretty well educated about things like that also having gone through quite a number of vicissitudes since the Second World War and I've also been on record by saying better to have eight years of the troika than eight hundred years of the English you don't really want to go back to the pound because I would have thought that would be the main alternative so I would certainly put Ireland in a different camp and much more realistic and much more grown up if you like than the other countries that are known of as the periphery but I think it's quite likely that they will stumble on one or two may leave, it won't really make much difference to the whole thing we will still have a euro in a few years time my view is that the euro will be possibly more stable than it is now but it will be narrower and a lot less ambitious and the final words in the book I say we should prepare for neither resounding success nor catastrophic failure but instead for a further drawn out phase of standoff slow down and stalemate so I don't know whether this sounds like the kind of book you'd like to take off to the beach because it could be that if you read this book you would certainly want to go into the water and drown so I don't necessarily recommend you to do this but I think rather than waste our energy and our efforts by asking the Germans to do all sorts of impossible things that I don't think they're going to do we should try to adjust to a future which is not going to be successful but will not be one of absolutely resounding failure the big worry of course is that while Europe stagnates other parts of the world particularly in Asia are drawing ahead but that I would say is another discussion thank you very much thank you very much