Berlin 18-02-2010
Ever since its inception and launch in 2002 the Euro has been celebrated as a triumph of monetary innovation and political unity.
The 16 nations that now use the currency and make out the ‘Euro zone’ are facing an unprecedented problem in having one of its country members, Greece, in the serious position of defaulting on its huge national debt.
As questions mount about the very future of the currency due to the ongoing Greek debt crisis,
There is growing anger in mainstream Europe over Greece’s financial recklessness and its apparent dishonest book-keeping and increasing unwillingness to and bail Athens out.
Greece has a budget deficit of around 13% of GDP and a 300 billion Euro public debt, which former Greek government officials hid from the rest of the Euro zone.
Now that Greece could possibly default, the other Euro countries will be expected to cough-up further loans to keep the country solvent – which is not exactly what penny-thrift and also crisis bound countries in the Euro-zone, who have lived within their means, want to hear.
Germany and France — the two largest euro zone economies — would have to contribute the most in any bailout of Greece and it is by no means certain how their voters would react to sending their tax funds to pay for what appears to be clear Greek mis-management.
It is going to be hard to sell this to European voters, but their governments may be forced to do it if the speculators keep attacking Greece — and then by extension, the actual Euro itself
Assisting an errant partner may prove to be unpopular – however so would the consequences of doing nothing. One thing is certain – Greece’s problem will not just go away and it will not be solved overnight.
Europeans have been duly proud, and others -especially American and English bankers as well as politicians -have looked enviously at the steady rise in the value, stability and international stature of the Euro.
So it is no big surprise that these same two ‘fair-weather’ friends – who have between them caused the whole financial crisis in which the west now finds itself in - bloat and exude a great deal of ‘schadenfreunde’ now the currency has hit some turbulence.
The dollar and the pound cannot afford to laugh at the Euro, or the Chinese Rinminbi – those who laugh last, laugh best.
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Not only a Berlin problem. It will affect the whole euro zone
The Euro-zone in my opinion made a huge mistake when choosing for one currency.
You can not have one currency, If all countries in the Euro_Zone keep there own governments.
Now every government/country has to be successfull to push the Euro up. Which is impossible, so the weaker countries will always pull the strong countries down.
If you have 1 currency you need ONE central government and one monetary pollicy. You would have to have a set up like the USA. 1 president leading all the separate states.
For Europe and the EUro the only way is down. THe issue that countries can not print more of their currency to solve or help with their deficit problem will show to be a economical fatality.