I had planned on letting this Telegraph article go other than to save it for future reference. The Europeans have long been forgetting that they need to pretend that the euro is actually worth something, and because of that it’s been inevitable that at some point it will in fact not be worth anything.

Remember, the euro is just like the dollar and most other currencies in that respect: it has no worth other than what we pretend it is worth. We have to act like it’s worth something or it isn’t. When we start acting as if money isn’t worth anything—by creating more dollars as if that’s all that’s necessary to create more wealth—then it quickly becomes not worth anything.

In the case of the euro, they’re pretending that being bankrupt is just some state of mind, and not a mathematical fact. Greece is bankrupt; that’s not a voluntary thing once it’s happened (it is of course a voluntary thing in that how they got there was their choice).

Vox Day wrote a great analogy at Vox Populi:

It’s really astonishing that the European Union has refused to recognize that Greece has gone bankrupt. In trying to save the banks holding sovereign Greek debt, they went and destroyed the value of all the trillions in credit default swaps. It’s like declaring that corpses aren’t really dead, so therefore the insurance companies don’t have to pay out on any life insurance policies. That might save a company or two in the short term, but it destroys them all in the intermediate term for the obvious reason that no one is ever going to waste their money on life insurance again.

It’s like declaring that corpses aren’t really dead! It doesn’t change the state of the corpse. But it does change the trust people have in you. When it comes to currency, trust is the only worth it has.

If we continue to pretend that it doesn’t mean anything, then it won’t mean anything.