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 - Not too little, possibly too late - The ECB takes action
Finally the ECB is beginning to sound like a Central Bank for all countries sharing the single currency. When called upon to deliver directly on its latest announcements then only will European citizens across the eurozone acknowledge they have not been thrown entirely into the frying pan of financial markets. For all the specificities of which there are many the whole gambit boils down to this.
It is only fair to say Mario Draghi has made some solid statements on the ECB's readiness to uphold the Euro. He has spoken up consistently since taking over the ECB's top job from JCTrichet. Yesterday he made good on those statements by cobbling together a set of measures that redefine the ECB's role in the current Eurozone context. However, it cannot go unnoticed that it took Spain's size and potentially Italy's - or nightmarishly both together - to force the ECB spring into action. While small countries were targeted by bond markets eventually succumbing to the bailouts, the ECB in retrospect effectively failed to stand up for them in earnest.
The ECB has at long last seized its role as a Central Bank would for the Euro-17.
At national and EU level focus must equally shift to growth policies. Not a theoretical approach but a very clear and pragmatic one. Importantly, to where sound economic growth is to be generated in the future across many countries. Ultimately the only way for any country/economy to settle dues and refinance itself in the now all but shuttered financial markets.