It looks like we are nearing the end of the beginning of the Euro crisis. It is patently clear that the Eurozone governments are incapable of creating conditions in which Greece can remain, they also don't seem to be able to see that Greece will definitely leave.
The main players have had two meetings this week, the G8 and the EU leaders. Neither meeting came up with anything of note. There is even division at the top, between France and Germany.
With every passing day it seems that they don't have a clue.
So, Greece leaving is the end of the beginning of the crisis, and without having a middle it will then be the beginning of the end.
A few weeks ago I would have thought that Greece leaving would be a good thing to enable the rest of the Eurozone to remain intact. The last few weeks has shown me not to be so sure. I'm now beginning to think that the contagion effect is now probable and that Greece leaving could precipitate a quick fall for some other countries. If that happens, then I'm not sure, now, that the Euro could survive.
The example of other countries leaving the Euro, devaluing and then becoming more competitive could be the last nail in the coffin for the Euro.
Robert Peston's documentary detailing the launch of the Euro has shown that this project should have been strangled at birth - and was destined to fail. The Euro is dysfunctional, and it's now shown that the EU is dysfunctional too. So, if the Euro does not survive it is also likely that the EU will splinter.
I can now foresee referenda happening across the EU, for leaving the Euro and some for leaving the EU. Certainly I think there is a 60% chance the UK will leave in the next 10 years. We may even re-found a new EEC on the original basis but without ever closer integration - certainly something that most people thought we were joining in the first place.
The next year is going to be fast paced, chaotic and dangerous. Let's hope we can come out of it ok, but I suspect there will be a lot of pain.
Squiffy.
Saturday 26 May 2012
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2 comments:
This news is aired in radios days ago, until now. This is a serious issue about Greece separating from Euro Zone. If Greece separates from the Euro Zone, Greece will encounter economic problems and political problems.
By: exchange rates
Hi Ira, thanks for your comment. I agree that it is a serious issue for Greece to leave the Eurozone.
But, Greece is already experiencing deep economic and political problems and I don't think the Euro is particularly helping.
Squiffy
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