by Yorker on 21 March 2013 07:28

Now, just before you dismiss this idea as madness, let's consider a couple of ideas that really are mad. How about this one: you build a currency union among totally divergent economies across Europe thus giving them a currency that is either too strong or too weak relative to their fundamentals and an interest rate that is either too high or too low.

When catastrophe strikes, as it inevitably does, you refuse point blank to face up to the blindingly obvious and allow the worst hit countries to pull out of said currency zone, devalue and put themselves back on a competitive footing. Instead, you do the equivalent of bombing their economies back into the stone age with austerity measures that won't work anyway.

In the latest fiasco, you decide that the best way to solve the problems of a small island in the Med is to steal from people's savings accounts. Astonishingly, they get quite upset about that and reject it.

So, that's the euro and that's Cyprus. Oh, and the latest mad idea is that Russia could do the bailing out meaning that the whole house of cards is only remaining upright because it's being underwritten by Vladimir Putin's Kremlin.

Now, here's an idea that is actually grounded in sanity. Cyprus should ditch the euro and adopt the Israeli Shekel. Think about it.

It's one of the best managed currencies in the world and is already used by default by 2 or 3 million Palestinians. Another 1 million Cypriots would not make much difference.

There is probably greater similarity between the Israeli and Cypriot economies than there is between the north European ones and Cyprus, and one imagines that Greece would like to join in too at some time. It could be that when Syria and Lebanon settle down they too would be wise to adopt what could well become the the main currency of the Eastern Med region. Think of the trade and political benefits all this would bring about.

And remember, as daft ideas go, there can be nothing dafter than what we have now...