The Euro, as a single currency, should be abolished
Another black and white motion statement leaving me no option but to choose No. While I agree to the first part I am not prepared to contemplate the idea that the Euro should get abolished. Abolished? Then what? All 17 countries now sharing the single currency would revert back to their old monies? Or a new version of yesteryear's currencies?
Simplistic as I made it out to be packed in a few odd questions, every single serious economic, financial and social consequence is inextricably wrapped up within each. That is where the stakes are high enough to ensure that the Euro is given a new lease on life. It calls for closer European integration. What form and shape this will take is for policymakers and far-sighted politicians to grasp and propose.
It would seem to me that the Euro has many underlying strengths but will not - contrary to the founder's beliefs - assure convergence between all the economies it services. How could it? The divide has been felt acutely lately (1-2 years) the logical consequence of relevant economic under-performance among member-countries.
There has obviously got to be a political solution rooted in realistic economic fundamentals. The road traveled so far proved artificially smooth during the first 10 years I dare say but unsurprisingly very bumpy in the last 1-2. It could not have been otherwise given the structural differences setting these countries apart. And excessive spending pursued mostly by a few Southern European States who could not see beyond the present. Adherence to the Maastricht criteria never again seemed to be taken seriously once countries landed themselves inside the Euro club. Not to mention Greece that never fulfilled the criteria in the first place or ever bothered to balance its books.
Very disappointing to admit but the Euro Zone is indeed right in the middle of a storm testing its main crews to the limit. The latest summit decisions seem to indicate that where there is a will there is a way. It may have just been one first small step in the right direction.
The specifics are very hard to work on. Yet it would seem to me that the 17-member Euro Zone and the larger EU can hardly afford shooting down the Euro. The broader picture needs to come into full view. An hypothetical demise of the single currency would deal another severe blow to Europe's economic fortunes. Its relative decline vis-a-vis the rest of the world would get a further boost.
I do not like misplaced calls for solidarity from Southerners but would rather see the stronger half of the dividing line realize where their medium-to-long interest lies. To that end many balances across the Euro Zone need to be restored at the earliest.
Europe agrees a "shock and awe" bailout for Greece
A rescue package of epic proportions, epic challenges for the Greek government and people, epic uncertainties and epic stakes for the single-currency.
It was the Euro's defence that ultimately forced politicians from Germany to Malta to perform a hard balancing act whose overall success is far from assured.Each finance minister has enough reasons to fret and grumble about.It being the Euro as a common currency, because of Greece despite Greece. Up to now every 'least damaging' approach failed miserably to cool down the financial markets that remained as unimpressed as ever throughout. For its part Greece is effectively the main winner in this high-finance gamble.The country bought time the markets were not willing to give it once confidence vanished.Precious time desperately needed to restore credibility and good governance at home. A daunting internal fix with daunting external implications. Three full years is what the government and Greek society top-down and bottom-up now have to set the record straight in so many ways. Literally and figuratively.
For the other 15 Eurozone countries - each facing own troubles to varying degrees - keeping fingers crossed would be mild to describe the monitoring of Greece's performance over the coming 36 months.Potentially they are all losers, starting out by losing simply to avoid bigger losses! There are so many relevant questions that might be asked to which full answers ought to be provided. They won't get asked or get answered. Tellingly, each and every single one of them would now seem rhetorical or at best an exercise for academia.
The spectre that haunts Europe
I am still hopeful that Greece will not require a bail-out in whatever form pinning my hopes on the PM's own words.
He did sound very bold and brave in the face of such overwhelming odds but until a deal is actually in place I would rather believe the Greeks can and will take care of themselves.
My stance is wholly based not on immediate needs triggered by the Western financial meltdown that led to the economic downturn.This in turn led to a collapse in tax revenues across countries caused by economies shrinking badly.
To a large extent Greece is indeed a one-off case-study for the worst reasons, its latest fiscal deficit the sum total of profligate spending, widespread cultural-rooted tax evasion, underbudgeting, creative accounting, weak notion of public service and duty, etc - all conspiring over decades to bring the country to the brink of bankruptcy.
I am sure many Greeks will have seen it coming and warned their governments in years past.To no avail as even the present government was elected as recently as late 2009 on a platform to increase spending.
According to EMU rules public finances were clearly to remain national responsibilities.A considerable chunk of sovereignty for States to manage through their democratically-elected governments of the day.
Would the Greeks have liked their Finance Ministry to be ruled or dictated to from Brussels or Frankfurt just so the Maastricht-agreed criteria could not have been so despondently ignored?
Current turmoil is the Euro's hardest test ever but one that will also represent a defining moment in the single-currency's future.
It is a fact that Southern European countries are faced with similar issues though not on the same scale and urgency.Others in Northern Europe, the US and Japan also recorded their biggest fiscal deficits and added up noticeably to their debts in 2009. Each one has its own track-record, however. This is exactly what sets Greece apart from the rest. Each country is unique in its own way, there being obviously overlapping between them.
International rating agencies must make the effort to closely monitor and register those differences and then advise financial markets.
After all it is sovereign countries and sovereign debt one is dealing with.
There is much more at stake than strictly soulless bundling of nations.
TEc debate motion "This house believes the Euro area will fragment over the next ten years" Uncertainty is the key word:
I am encouraged by the no vote crawling steadily upwards to come back post a second comment. If that evolving result is an indication of what my vote might have been it also underpins all the hesitations stated in my earlier writing.
The debate has been varied, many contributions have added new viewpoints as to what might lie in store for the Euro. I remain stuck as ever in agonizing doubt torn between wishful thought and unfolding uncertainty - where there should be at least a semblance of predictability.
If the original political drive to create a single-currency aimed at speeding up European union now appears out of focus, one has to wonder whether economic strains may eventually prove too great that a break-up becomes inevitable. Too soon to tell given the many twists and turns that took place since Greece first buzzed the emergency siren.
As each of the 16 Euroarea countries grapples with internal problems overwhelmed by public finance imbalances and feeble economic growth - to varying degrees - the time has never been as ripe for doom-sayers. Nonetheless, should the Euro pull through its lowest stretch to date and relevant economic growth return to Europe then a quick change in fortunes may be forthcoming. As it is, the Euro's near 20% devaluation since the onset of the crisis represents a major breathing gap. That gap which many economists traditionally favor as quick recipe to recover competitiveness already verified. A downward adjustment against major currencies 'without a single shot being fired' or member countries getting kicked out to work that devaluation themselves in their old-new currency.
One thing though is very clear to me: no amount of political will or generous intent and gesture at the best of times will suffice to hold the Euro area together indefinitely. If overall conditions in weaker countries should worsen instead of showing marked improvement in coming years something will give in down the line. What this means is that the Euro area as a whole but especially its weaker links must read the current situation accurately.Mostly, their own individual predicament within the Euro club which I assume each wants to continue belonging to.
A more balanced Eurozone economy is certainly called for in the longer run. This is in full knowledge that it is unachievable overnight.Or even over a short-to-medium timespan. That broadly means surplus and deficit economies becoming less so. The stakes are very high but no effort must be spared doing the right thing for the right reasons from a commonly shared objective. For now governments appear resolute tackling the budget and taxes. As important, if not more, is to strengthen economic growth in the years ahead.
A tough act to balance but a golden opportunity to review development and social priorities. Many a country's direction seeking mainly self-sustaining income-earners for tangible wealth creation.
Hopefully for Eurozone's survival's sake Mark Twain will be disproved this time: When all is said and done, more will have been done than said!