The Euro: Tomorrow's Currency or Yesterday's Coin?

On January 1, 2002, twelve nations began using the Euro and phased out their own currencies over the next two months. Since then, the Eurozone - the sum of the territories in which the Euro is the official currency - has grown to eighteen countries. In addition, the Euro has be recognized, adopted, or used in various ways by several more countries.

Twelve years later, the common currency - and more importantly, the bonds which it has forged between economies - has become a way of life for many people in many nations. But twelve years is short time in world history. The question may still be posed: is the Euro here to stay? Or is this a brief interlude in normal economic patterns?

Jeff Madrick points out that economic conditions in some southern European countries - Italy, Spain, Portugal, and Greece - continue to act as a sort of ballast on other economies in the Eurozone. This inevitably creates a sort of tension, as stronger economies like Germany are asked to pay for a series of fiscally irresponsible decisions made by the southern governments.

The ripple effects of strained relations inside the Eurozone will affect the United States; the only question is whether such effects will be significant or small. The financially negligent choices made by some, not all, southern European governments - accumulating government debt, high tax rates, nationalized healthcare - place a burden not only on Europe's productive economies like France and Austria, but will eventually have some effect on the other side of the Atlantic. Madrick notes:

Angela Merkel has just been comfortably reelected chancellor of Germany, which seems to strengthen the hand of austerity advocates there. Throughout the euro zone, trade is becoming less imbalanced. Productivity is rising in some countries, and a decline in labor costs is helping exports. All of this has led to a calming of financial markets. But the other side of this coin is extreme deprivation across the south of Europe, where unemployment remains extremely high and GDP is well below pre-crisis levels. Meanwhile, here in the United States, Janet Yellen is set to replace Ben Bernanke as chair of the Federal Reserve, and many observers wonder how long she can resist inflation hawks, who are demanding the “tapering” of the Fed’s quantitative-easing policy. Events in Europe could well influence her decision, and her decision will in turn surely affect economic conditions in Europe.

French scholar Emanuel Todd offers a perspective from Paris. Most scholars, economists, and businessmen reckon that the Euro will be around for a long time. Todd isn't so sure. Even if it does endure, Todd argues that it will do so out of pure stubbornness, not for any economic motivation. The French government considers the Euro to be its trophy, inasmuch as it persuaded other European governments to sign on for it. To abandon the Euro would be to lose its hard-won prize, so the French government continues to support the Eurozone into the future. Todd remarks that

outside Germany, it’s pretty obvious that the euro is a complete failure. So the mystery I’m talking about is: Why does it go on? That is not an economic question; it’s an ideological question. I think France is much more responsible than Germany for this mess. The German dominance of Europe is possible only because of French acceptance. You must realize what the euro is from the point of view of French politicians, whether right wing or left wing. They had the idea, they imposed it on Germany, which accepted it and turned it into a very efficient, German economic instrument. For France, getting out of the euro would mean admitting that our entire political class was hapless. It would be the beginning of a social revolution.

Germany is one of the few countries in the world which is presently turning a profit on manufacturing. Germany is building products in its factories and exporting them in large numbers, as well as selling them domestically. To what extent did the Euro help or hinder Germany in achieving this enviable condition? How would the demise of the Euro affect Germany's production? How can the United States return to this same condition - becoming both a major and a profitable manufacturing power?

Whatever happens to the Euro, the center of Europe is inhabited by the one nation that really doesn't care too much. Switzerland never adopted the Euro, and the Swiss franc remains one of the world's most stable and envied currencies.

Berlin: die Hauptstadt

Although Berlin is by far the largest city in Germany in terms of population, it is not the largest city in terms of area. This density is due to the fact that, from 1945 until 1989, Berlin was surrounded by the infamous wall, and the expanding population could not move outward into suburbs.

While Berlin is also politically the most significant city, as the capital or Hauptstadt of Germany from 1871 to 1945, and again the capital of Germany from 1990 until the present, it is not the oldest city in Germany. The first written records mentioning the town of Berlin date from 1244 A.D., as compared to Hamburg which was founded in 808 A.D., München which was mentioned in writing for the first time in 1158 A.D., Köln which was founded in 38 B.C. (but did not receive the name Köln until 50 A.D.), or Leipzig which was first mentioned in writing in 1015 A.D.

Many German cities are so old that nobody knows exactly when they were founded. For those cities, historians record instead the first time they were mentioned in writing. It is to be understood, naturally, that those cities probably existed for some years prior to the first written mention of their names.

The city began as a fusion of two small villages, one named Berlin and the other Cölln. Historians estimate that the city had 12,000 inhabitants by the year 1600. The city grew quickly, becoming, in 1747, the first German city to surpass a population level of 100,000. Berlin grew not only by adding to its population, but by expanding to swallow up other small villages in the area: Spandau, Köpenick, and Charlottenburg.

In 1701, Berlin became the capital of the Kingdom of Prussia. In 1871, the modern nation-state of Germany was created by the merger of many small kingdoms, republics, and independent city-states. Berlin became the capital. As a capital city, Berlin accumulated buildings and parks with spectacular architecture, and became an educational center. Many famous authors and scientists lived at least part of their lives in Berlin.

Among the famous people who spent all or part of their lives in Berlin are Dietrich Bonhoeffer, Bertolt Brecht, composers Paul Gerhardt and Johann Crüger, Nastassja Kinski, Max Planck, Richard Strauss, and Frederick the Great. The Humboldt bothers, Karl and Alexander, were scientists and statesmen, and one of Berlin's universities is now named after them. The civil rights pioneer W.E.B. Du Bois lived, worked, and studied in Berlin for several years.

Between 1940 and 1945, bombing raids inflicted massive damage on Berlin during the World War II. Many historic structures were destroyed.

After being the capital of Germany from 1871 until 1945, Berlin was divided into two parts, east and west, in 1945. The western half was under the administration of the British, French, and American armies. The eastern half was dominated by the Soviet Union. The three western allies gave up their jurisdiction over the western half and allowed West Berlin to function as a self-governing city, with freely-elected representatives. The Soviet communists maintained a strict dictatorship over East Berlin by means of a puppet government instituted through feigned elections.

In order to obtain West Berlin, the western allies gave the Soviets some territory that had been part of West Germany; that region would become part of East Germany. This deal was made in February 1945 at the Yalta conference before the war ended. The details of this agreement would be finalized in the Viermächteabkommen - the Four Power Agreement.

The tensions between the Soviets and the western allies, temporarily set aside during WWII, reemerged in the postwar era, called der Kalte Krieg or the Cold War.

West Berlin existed as an isolated territory, surrounded on all sides by East Germany and East Berlin. Provisions arrived mainly by railroad and by truck, coming from West Germany through approximately 200 km of East German territory. The Soviets took advantage of this situation, and in June 1948 suddenly and completely stopped all road and rail traffic between West Germany and West Berlin.

The daily food - as well as medical supplies, newspaper, clothing, etc. - needed to keep one of the world's largest cities operating was suddenly cut off. The Soviets were reckoning that West Berlin would soon be starved into surrendering and join East Berlin. The western allies did not want West Berlin to surrender so easily, and started the Berlin Airlift.

From June 1949 until May 1949, in order get around the Soviet blockade of Berlin, the western allies organized continuous flights of aircraft into Berlin, bringing food and other supplies. The Soviets had thought it impossible to fly enough food in on a continuous basis. Berlin had two airports - Tempelhof and Gatow - at the time. During the airlift, a third emergency airport would be built: Tegel. At these three sites, aircraft landed and took off every few seconds, non-stop, day and night, for almost a year, until the Berlin Blockade was ended in May 1949. West Berlin remained free and independent. The western allies had done what the Soviets thought was impossible: fed a major city by air.

East Germany's economy was endangered by its shrinking population. As increasing numbers of residents from East Berlin began to flee into West Berlin for freedom, and after a telephone conversation between East Germany's General Secretary Walter Ulbricht and Soviet Chairman and Secretary Nikita Khrushchev, the communists built a wall to stop East Germany's population losses.

The famous Berlin Wall encircled West Berlin. By foot, by car, or by rail, anyone entering or leaving West Berlin could only do so by going through one of a few checkpoints manned by East German soldiers. The wall was built suddenly in August 1961, with no notice, in a massive overnight action. Many people were permanently cut off from their friends or families. Residents of East Berlin, East Germany, West Berlin, or West Germany were not often granted permission to cross the border at the checkpoints.

Die Mauer - the wall - ran along one of the city's most famous architectural landmarks, the Brandenburger Tor - the Brandenburg Gate - which was already a symbol for the city of Berlin, and now became a symbol of the struggle for freedom against the communists during the Cold War.

It should be emphasized that the Berlin Wall did not divide East Germany from West Germany. The Mauer surrounded West Berlin, i.e., the western half of the city of Berlin.

Berlin would remain a divided and walled city until 1989. The government of East Germany and East Berlin collapsed in that year, due to a massive peaceful protest supported by the Lutheran church in the city of Leipzig on September 4 of that year, and also due to continued diplomatic and economic pressure from United States President Ronald Reagan.

Following the collapse of the East German government, the wall was quickly attacked by crowds who chipped away at it with hammers and other tools. Soon thereafter, West Berlin was reunited with East Berlin, and West Germany was reunited with East Germany. The Wiedervereinigung - the reunification - is a major turning point in modern world history, signaling the end of the Soviet Union and its militant communist aggression.

Today, Berlin is both the capital city and a Bundesland, one of Germany's sixteen states. Among its millions of residents are thousands of Ausländer or foreigners from all over the world.

In addition to hosting government, science, industry, software, technology, and university research, Berlin is also a goal for thousands of tourists daily. They visit the Kulturforum with its museums and concerts; the Tiergarten, one of the world's largest zoos; Potsdamer Platz, a large public square bordered by major shopping districts; the Kurfüstendamm, a major street with shopping, restaurants and nightlife; the Alexanderplatz with its historic buildings; and the Sowjetisches Ehrenmal in Treptower Park, a large monument left over from the years before 1989, when the Soviet army occupied Berlin.

The Bundesland or state of Brandenburg surrounds the city of Berlin, and many of the museums and other sights are operated by the Prussian Cultural Foundation - the Stiftung Preußischer Kulturbesitz.

Both tourists and local residents get around the city using its excellent transportation system, include the S-Bahn or local commuter train, the U-Bahn or subway, the Straßenbahn or streetcar, and a bus network featuring Doppeldeckerbusse.