The Euro under a magnifying glass

The events that the Euro crisis is feeding on are becoming increasingly strange lately. Aside from the relative difficulty and delay in which European leaders agree on the future moves, from their amplitude and the concrete perspective to implement the rescue solutions (implementation, calendar), and there are two levels of the debate shaping up, each very interesting from a political point of view. The first concerns the future of the unified European currency, and the second concerns the real impact of the financial crisis in the Eurozone, in particular on the American economy and its chances of recovery.

As for the future of the Eurozone, what attracts attention is the increasing discrepancy between the statements of the European leaders and those of the "specialists". European politicians, starting with the Merkel-Sarkozy "marriage" and starting with the sycophants at the top of the European Commission, the European Council or the European Parliament, are trying to convince each other and the citizens of old and beautiful Europe that the future of the single currency is secure, even if it were to go through a difficult patch, for a while, that they know what they should do and are doing it to solve the situation, and even more, to make sure what is happening now will never happen again. The optimistic attitude of the political leaders, even though some of them may look a little more glum than usual, is sometimes backed by the statements of the European Central Bank. On the other hand, all sorts of "experts" at reading the economic future, from Roubini to Soros, announce every other day that the Euro has already been buried by the rubble of political incompetence and impotence; the only thing we should concern ourselves with, these fortune tellers claim, is what our world will look like after the Euro becomes just another exhibit in the museum of brilliant, but yet so ephemeral ideas which originated in Europe. Incited by the stake and by the sensationalism ratio of the events which could result in the collapse of the Euro, the press is also adding fuel to the fire, leading to an overabundance of opinions on the matter that become irrelevant on the next second.

As for the impact of the Eurozone crisis on the American economy and on its chances at a recovery, the positions also lie on opposing sides, with everyone firing at will. Politicians on the other side of the Atlantic, starting with the tenant of the White House and with the people looking to make a name for themselves as the next candidates, all claim, on different tones, but just as adamantly, that the troubles of America and especially its increasingly distant recovery outlook is caused by the mistakes in Europe and by its refusal or its inability to implement the American solutions. On the other bank of the Atlantic, there are voices of public officials claiming that, using their strong banking institutions and its financial instruments, the US have seriously contributed to the Greek crisis, but the final target of the entire operation was, ever since the beginning, the stability and the existence of the European currency. What is hiding behind the polarization of these opinions and what is their political stake?

Regardless of how many difficulties the economic and financial crisis would generate on a European level, the hypothesis that the Euro would disappear from one day to the next is very hard to accept. Among other reasons, because the Euro is not just a financial-economic creation, but first and foremost, a political one. Its disappearance can only take place amid decisions and political processes which would throw Europe back not just to what it was in the "90s or even the "80s, but before WW2. Those who say that the Euro will collapse always fall back to just one argument: there are apparently no means to see how the currency would be supported, if the sovereign debt crisis were to generalize. The idea of making these debts "commercial" and temporarily covering them with Euro-bonds, meaning more debt with a longer maturity, was vehemently rejected by Germany due to a very simple reason: that solution amounts to "socializing" the European debt, while the sources of those debts were just certain nations.

Thus, while Germany may be certain that it can, through its own means, handle the issues pertaining to its debt, without worsening its situation or risking its stability, Greece, Ireland and even Italy have completely moved beyond this paradigm and their only solution is to resort to European "solidarity", meaning offloading part of their burden to others. The reasoning is brief, and goes like this: if the major European states can't support the Euro (and they can't!), then the only option left is to dismantle the Euro! When looking closer, it becomes clear that there is no argument strong enough that would lend any credence to the idea that the European economies can't support their currency any longer. The great disagreement and hence the major trouble in making the decisions did not arise from the question whether or not the Euro should be saved, but rather from the way the costs and the benefits of the operation to rescue the Euro are being shared now and how they will be in the future. The other counterargument is tied to the huge costs of leaving the Euro, for the weak and the strong economies alike. Even though they are expressed differently, these costs are huge from an economic point of view and completely unsustainable from a political point of view. That is why the Euro will be kept alive, even at the cost of exorbitant resuscitation expenses! This means that the reason of the rumor mongering around the Euro is merely one of speculative origin! In other words, useful and potentially profitable for those who have access to enough money to win at the roulette table of great financial market speculation, at "directed currencies attacks", at waves and counter-waves of forced hostile takeovers, speculative sales and the exploitation of margins for error generated by the short term, uncontrolled reactions of the currency markets.

From the second angle of the topic, the increase of the gaps, of the discrepancies in the approach and of the differences concerning the solutions to control the global crisis, which are obvious in the relationships between Europe and the United States, the simple solution would be to blame the electoral schedule. What are American politicians looking to get into the White House going to tell their voters: that it's their own fault for the fact the train of finance was derailed? That they were the ones who made and unmade the rules of "the financial industry", allowing some to earn as much and as fast as possible, regardless of the consequences? That they have no idea on how to escape this crisis and that is why they let those who sowed the seeds of the crisis, namely the FED have the controls of the ship? Definitely not! After all, they are not that stupid! Good thing that this Europe thing came along! Europe is to blame for everything. This is even better because, lacking ideas and platforms, the entire electoral campaign of the future candidates for the White House can focus on the problems for which they can pin the blame on Europe, and on the fears that on its way to the abyss, it could drag down with it the squeaky clean, good and wise Americans, even more so than Snow White, the old man's good girl and Little Red Riding Hood, together!