Hard cop, soft cop
WE FOUND that out earlier. How furious we were — or rather, how angry our Trea- sury ministers were — with that horrid Hel- mut Schlesinger and his beastly Bundes- bank, which had let us down, when the Ger- mans had promised to look after us. No doubt we had asked the wrong Germans. They like to play hard-cop and soft-cop between Frankfurt and Bonn. The Bundes- bank has its priorities and it has its rules, and no one in Europe has more to lose from monetary union. As I said in the first place: 'To rely on the ERM as an external discipline is to say that we would prefer that others acted for us. They will, of course, act for themselves.' So they did. The ERM was a Deutschmark standard, just as Bretton Woods had been a dollar standard, and Sam Cross of the US Trea- sury picked out the flaw in that: 'When you postulate a system that depends on one country always following the right policies, you will find sooner or later that no such country exists. The system eventually is going to break down.' So it has.
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