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.
Besides the French people whom the Presidential election concerns directly, many in EU countries are watching closely too. I certainly am especially since Mr. Hollande used direct speech to call for turning growth into a political priority in the EU. It would be hard for anyone to disagree with such a stance after years of economic decline related to excessive debt. The path travelled so far has been tortuous - perhaps unavoidable - with mixed results at best, a complete failure at worst. The predicament of the Eurozone, as built, is quite complex indeed. Given the limited role played by the ECB - normally a key component in a currency union - working in a typically capitalist contraption. Financial markets spotted the weakness to pursue a relentless game of pushing up interest on those least able to afford it. Now raises are driven by fears that contracted economies will never be able to generate enough revenue to repay debt and interest dues.
A lot has been said and written on all factors that played into the current full blown crisis. The time has definitely arrived for an honest assessment to be made. Or else politics is doomed to irrelevancy in the face of major financial challenges. Delivery has been patchy across countries affected the most. One common denominator, however, standing tall: massive unemployment, declining economic activity and uncertainty on what follows next.
To my mind Nicolas Sarkozy is a safer bet within the known realms of the system as well as on many other aspects of French public policy. Unfortunately, as he himself said, this is not one but many crises added together. It is a challenging world where many variables are changing fast or have changed already. And Europe - Western Europe in particular - is ill-equipped to face up to them unless a serious review is made of fundamentals previously taken for granted. Again, Sarkozy would appear to be the better candidate to stay on the job.
Crucially though, I believe the EU needs a shake-up. I am not at all sure François Hollande will, if elected, deliver such a shake-up starting with the Franco-German entente. Nor am I convinced by some of his proposed policies to address France's own problems but that is for the French to judge.
Just as France needs to restore multiple balances internally so does the EU as a 27-member bloc. Each member State pooled significant chunks of their sovereignty in exchange for an European ideal - broadly understood to mean a continuous geography of political freedoms, social advancement and prosperity. The people in many countries are seeing some of the 'basics' of the trade-off undermined by a sovereign-debt crisis raising many more questions than there are credible answers to.
What next, then? What room is there for politics and politicians to act on behalf of the people who elected them in the first place?
In this regard the untested François Hollande offered a glimmer of hope. If he wins we will quickly know. Very nearly the day after...