Who wants to leave the Euro?
Surely I’m not the only one to take notice that the bulk of the doomsday talk these days about the imminent fall of the euro is coming either from outside Europe or from eurosceptics.
An underlying assumption of this dire talk, perhaps, may be the idea that eurozone citizens are so discontented that they are demanding return to national currencies. But where is there evidence of this? Even most Greeks, supposedly mad as hell at EU leadership, reportedly want to stay with the euro (see here, for example).
And, although it’s admittedly an anecdotal report, I can say I’ve not heard or seen either a peep or a scribble of any such San Pietro! let’s return to the lira talk here in Italy either. That is, except for the usual disgruntled voices of the northern far right who, more or less, want to exit everything including the southern half of their own country.
And then this just now in the UK Guardian‘s live blog on the eurozone crisis:
1.47pm: Almost four out of five Germans believe the 17-nation single currency will survive, according to poll for ZDF television. Some 78% of people asked said the euro would survive despite its problems while 56% felt chancellor Angela Merkel was doing a good job of managing the crisis. That’s an improvement on a similar poll in October which had her approval rating at 45%.
How much of a role does the European public play in the rise or fall of the euro? I have no idea really, given the murky fog that constitutes most financial reporting, and the politicians’ backroom political jockeying. But if eurozone voters’ support is needed to drive the currency into collapse, seems to me that’s a non-starter.
Everybody is backing the euro: Romano Prodi
Europe’s reputation was damaged at the beginning of the recent eurozone crisis, but now everyone is backing the euro, former Italian Prime Minister Romano Prodi said in an interview today with Bloomberg Television.
He added that it would have been better if the European Union had not taken so long to make its decision, but now the clear decision is that there is no alternative.
The delay has had very, very high costs, you know, but to build Europe, you need time, as you know, Prodi said.
To see the full interview (7:33), click on thumbnail above.
He said She said: Gavin Hewitt on the Greece crisis
A highly readable telling of the center-stage action in the Greece-Euro-EU-Germany squabbling of recent months was offered this week by Gavin Hewitt, BBC‘s Europe editor (“Greece and the story of George and Angela” May 3, 2010).
Even for those in faraway lands who pay less attention to Europe than they do to passing clouds, Hewitt’s informative narrative of the high-stakes duel between Germany’s Angela Merkel and Greece’s George Papandreou is easy to follow.
Excerpt:
So round after round they eyed each other. As the cost of borrowing increased for Greece George played his club card. They were all in the European family together. He waved the flag of European solidarity, guessing correctly that others , particularly EU officials, would come to his side. He was after a big loan that would persuade the financial markers to back off. Angela didn’t buy into this. Greece had to do more…
Saw the link to Hewitt’s piece on Bloggingportal.eu.
Speculators betting to bring down the euro, still
What is the real game being played now by market speculators? Shining a light on the true origins of this week’s sudden crisis with the markets and the euro is a commentary yesterday by Massimo Giannini in Italy’s la Repubblica. English translation online from presseurop (“Playing poker with the euro”, April 28, 2010).
Excerpt:
But in the speculators’ cold-blooded logic, Athens is but a decoy. The real target, the moon we don’t see, is greater by far: it’s the euro. In the kitty on the green gaming table where the states and markets are playing their hands, is the monetary union. As a matter of fact, the offensive has already been launched against Portugal, a country whose sovereign debt rating has already been downgraded and which is headed down the same inexorable road as Greece. Portugal is the next sacrificial victim.
Politicos talk but Greek people find their own remedy
Who says Greeks don’t know how to manage their money? An article by Bulgarian journalist Vladimir Simeonov last week at presseurop describes how residents in northern Greece are flowing across the border into southern Bulgaria in order to beat the increasingly high prices in their own country (“Welcome the Greeks bearing euros” April 01 2010).
Bulgaria’s two small towns of Sandanski and Petric are welcoming the influx of euros, according to Simeonov:
Over the last few weeks, the two border towns have literally been invaded by Greek shoppers, who throng cafes and restaurants, and queue up to visit doctors and dentists. In an apt illustration of the adage, “It’s a ill wind that blows no good,” Bulgarian traders are rubbing their hands with glee. ‘I can’t say we are delighted about our neighbours economic problems,’ explains one business owner, ‘but without them we would be going under too…
Greece, your rescue package is almost ready
The financial leaders of the European Union are almost ready with a rescue package for the being-pushed-downhill-fast Greece, according to an article last week in Spiegel Online International (“PIIGS to the Slaughter/Can the Euro Zone Cope with a National Bankruptcy?” Feb 22, 2010). Officials have been ordered to keep everything hush-hush for now, according to the article, but it offers a glimpse at some of the details.
The bones of the rescue package were put together by the combined efforts of German and French officials, the article states, who then brought the rest of the 16-country Euro zone financial members into the loop. Excerpt:
The German Finance Ministry expects support for Greece to amount to between €20 billion and €25 billion. All the members of the euro group are expected to participate, including those, like Spain and Portugal, who also might find themselves needing help soon.
In coming together and drafting the rescue package for Greece, the Eurozone countries had no choice but to do so, according to the article. The speculators attacks on the euro and on Greece reportedly are showing no letup. Europe is under threat of member-country bankruptcies, the writers say in the article’s opening lines:
The consequences would be dramatic for the whole of the continent, especially German banks, which are highly exposed to risky debt. EU politicians are willing to pay almost any price to help the beleaguered countries.
I would say this article is a must read for those of us standing on the sidelines trying for a glimmer of understanding of what’s happening in Europe now. The Spiegel article lays out a detailed and comprehensible chronology of how this potential crisis has been created, and what may or may not happen in the future.
It’s also stomach-churning reading, if you don’t share the to-hell-with-everybody-but-me profiteering views of speculators and bankers gone bonkers.
A little further reading: (Why?)
“This Crisis Won’t Stop Moving” by Gretchen Morgenson, New York Times, Feb 6, 2010
“Just a few lessons” (editorial by Jean-Dominique Giuliani, Feb 10, 2010)
“Rescuing Greece. Economic union. Two different things” by Charlemagne, The Economist, Feb 12, 2010
“Greece turns on EU critics” Financial Times, Feb 12, 2010
“Eurozone overhaul” by Mark Schieritz, presseurop, Feb 12, 2010
“Greece Derails: Is Europe Far Behind?” by Simon Johnson, Huffington Post, Feb 12, 2010
“Wall St. Helped Greece to Mask Debt Fueling Europe’s Crisis” New York Times, Feb 13, 2010
“The Greek Tragedy That Changed Europe” Wall Street Journal, Feb 13, 2010
“Goldman Goes Rogue – Special European Audit To Follow” by Simon Johnson, The Baseline Scenario, Feb 14, 2010
Portugal – “Slow progress to avoid decline” by Guido Rampoldi, presseurop, Feb 15, 2010
“Senior Goldman Adviser Criticizes Greece – Without Disclosing His Goldman Affiliation” by Simon Johnson, The Baseline Scenario, Feb 15, 2010
“The evolution of Greece’s financial woes” by Stamatis Assimenios, Deutsche Welle, Feb 16, 2010
“Euro flounders amid Greek woes” by Siva Sithraputhran, FRANCE 24, Feb 16, 2010
“The Dutch Join the Germans in Rejecting Bailout of Greece” by Edward Harrison, Roubini Global Economics, Feb 16, 2010
“A reminder for the EU: America did not create federalism to back the dollar” by Charlemagne, The Economist, Feb 17, 2010
“Feldstein’s Euro Holiday” Paul Krugman blog, New York Times, Feb 17, 2010
“Wall Street’s Bailout Hustle” by Matt Taibbi, Rolling Stone Magazine, Feb 17, 2010
“Fear of Mediterranean Contagion Grows” by Julio Godoy, IPS, Feb 18, 2010
“Crash of the titans” Commentary, Kathimerini English edition, Feb 19, 2010
“Greece Asks for Details on EU Aid Plan” Spiegel Online International, Feb 19, 2010
“Greece not looking for EU handouts with debt crisis, says Papandreou” by Zoe Wood, Guardian, Feb 21, 2010
“Prospects For Financial Reform” by Simon Johnson, The Baseline Scenario, Feb 23, 2010
Tough words from chief wonk at European Central Bank: Jürgen Stark
Continuing to try and find the god/devil in the details of what the European Union is doing or not doing to help the oh-so-ailing Greece, I came across some helpful clues supplied by Jürgen Stark, the European Central Bank Chief Economist.
In an interview in today’s Spiegel Online International, Stark faces some grueling questions and is unshakable in his tough love fiscal perspective (“‘Everyone Is a Sinner at the Moment'” Feb 12, 2010).
Topics covered include, of course, Greece’s teetering on the brink of bankruptcy, plus the debt of other member states of the EU, and the health of the Euro itself these days.
One of the first questions was about how safe the Euro is at present. Stark’s reply:
Stark: We have been in a global crisis for more than one-and-a-half years now. We still can’t say whether it’s over. But you could just as easily apply your question to other regions. No one talks about whether the United States could break apart because of California’s ailing finances. So let’s not take things too far!
SPIEGEL: Washington and the US central bank, the Fed, would certainly intervene before allowing California to go bankrupt.
Stark: To be honest, I don’t see that they would do that. There are many examples to the contrary in the history, including American history.
If you want info about the Greece-EU-Euro situation, other than the one-note dirge that’s commonplace in the headlines of USA and UK news coverage, this interview’s a good place to begin. (For earlier posts on this topic, go here and here)
Hedge funds et al trying to take down the Euro
In the European press, some are claiming that much of the hysteria about the health of the Euro is being deliberately hyped by a major American investment bank and hedge fund traders. That’s not to say that there aren’t huge problems for some EU member countries at present. But, reportedly, the usual greed suspects (who call themselves geniuses because they can do a little math) seem to be trying to push things over the brink so they can grab some quick profits.
And I’ve no doubt they will wave the flag a bit as they are doing this, as cynical justification for again doing whatever works best for them.
Admittedly, the news and commentary I’ve read coming from the USA and the UK are characterized by many thumbs down on the European monetary system. This week’s blog post by Paul Krugman at the New York Times is an example (I’m a Krugman fan, more often than not).
For anyone seeking to hear another perspective (or perhaps Euro-friendly voice), though, here’s an excerpt from an article in yesterday’s Deutsche Welle online:
Dta from the Chicago Mercantile Exchange, often used as a proxy of hedge fund activity, showed that investors had bet $7.6 billion in short positions against the euro in the week to February 2. This was the highest level since the single currency was created in 1999, the Financial Times reported on Tuesday.
I’ve learned to read all news with a filter for ideological bias, nationalism, personal gain or interest, or just simple cluelessness. Where under all this cacophony is a fairly accurate picture? Who are we to believe?
UPDATE: “Germany contemplates handout for Greece “ (Deutsche Welle, Feb 10, 2010)
Just who’s talking about threats to the Euro?
After I found the Der Spiegel article today, describing the migraine that Greece and its money woes are giving to the European Union leadership (previous post), I scanned more headlines at the newspaper’s website. I found this from earlier this week: “European Union Sees Threats to the Euro.”
The brief article paints an ominous future ahead this year for the Euro monetary system, predicting that the currency may continue its recent several-weeks slide downward against the dollar:
“…the euro stands at $1.41 and many analysts are now warning that it may be in for a long slide. Some are even concerned that the cohesiveness of the euro zone might be endangered altogether — with the European Union itself chief among the worry-warts.”
If I’d read this in a USA newspaper rather than an European one, I might take it with a grain or two of salt. Why? Because, having now inhabited both the two continents, and regularly followed the major news media of each, I’ve come to expect a predictable dose of media bias when one is reporting on the other. It’s been quite a slap to my rosy idealism of all fair and balanced, etc.
But this Euro gloom and doom is coming from a major German newspaper. Not to mention that the article is sourcing a recent report from the internal EU agency, Directorate General for Economic and Financial Affairs. So these baleful sounds have substance. Such as:
The report… went on to voice concern that differences among euro zone countries “jeopardize confidence in the euro and threatens the cohesiveness of the euro area.”
Financial turmoil in Greece is of particular concern, with the country running a public sector deficit of 12.7 percent in 2009, more than four times higher than the three percent target called for by European Union rules. But there are several other problem children within the 16-member euro zone, including Spain, Ireland and Portugal, with Italy also raising eyebrows.
Worrisome, definitely.
Dollar versus Euro: an inside look
Yesterday, Germany’s Der Spiegel (SPIEGEL ONLINE International) ran a fascinating piece about the hows and whys, and what’s yet to come in the ongoing, lopsided relationship between the dollar and the euro.
Writing about the Federal Reserve in the U.S. and the European Central Bank, Christian Reiermann offers a snapshot comparison of the two men in charge of them, and a history of how the contrasting philosophies of the two institutions came to be (“KEEP CALM AND DON’T PANIC” April 29,2008).
The article’s intro:
Never before have the central banks of the United States and Europe pursued such divergent strategies when it comes to dealing with a financial crisis. The increased value of the euro against the dollar reveals which strategy is working.
Reiermann writes in clear, straightforward prose that illuminates a subject that’s often presented — at least for mere mortals –as if it’s organic chemistry poorly translated from the original Swahili. Grazie!
Read more here.
