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Political will holds the Euro together

December 7, 2012

On purely economic grounds, the Euro should have collapsed long ago and indeed, that is what many predicted.

But pure economics is only one factor that governs the Euro, politics plays a huge role as well. (This isn’t a strictly European phenomenon… see “Fiscal Cliff”).

Given the fact that the Euro and the entire EU experiment is more an initiative of politics than it is of economics, it stands to reason that as the Euro lurches from one crises to another, it is political will that holds it together.

Following the horrors of the 20th century, the desire for European social union remains stronger, if even subconsciously, than Euro financial disunion.

This notion seems to be sinking in with Euro bears like Nouriel Roubini

“If you’re willing to do that for the sake of keeping the euro zone together, whether it’s economic reasons or political or geo political or foreign policy then Greece has a chance.”

And under the “what doesn’t kill you makes you stronger” principle, if (or as) the Euro survives the present crisis, it will be more resilient to a future one

Bearish Economist Nouriel Roubini Turns More Positive on Greece – The Euro Crisis – WSJ.


From → Economy

  1. Julia permalink

    Let’s hope that damned currency is blown away. We don’t want to pay for the rest of europe. Greetings from Germany!

  2. We should all just skip to the end and become the United States of Europe. Or call it just Germany, I don’t care.
    Greetings from Portugal.

    Of course, should a the Euro fall apart, the big losers would be those who have the most to loose. Germany, comes to mind. And then all the economic and political repercussions in each of the EU countries would probably lead to severe economic withdrawal, the drastic reduction in economic power of said countries that would inevitably occur would lead to huge reductions in international trades, big global enterprises would loose most of their interest (i.e. profits) in investing in those countries, so more unemployment, big unrest, even more than now, poverty would be much more of a problem than it is now, would could see drastic changes in the political situation of some countries (dictatorships, for example), and we all know what happens when first world countries have dictatorial regimes… WAR.

    Yeah, not to mention that many of the biggest companies worldwide come from the US, and those would see their European market cut in half immediately after the fall of the Euro. And it would only be worse after that. Think Microsoft, Google, Apple…

    And the big winners would be… Korea and China.

    So, basically, if the Euro is about to fall, the US will probably help Europe. I couldn’t care less about what Germany has to say on the matter. The strength of the European Union is the united market, it’s the freedom of travel and trade. Germany may have the economical power (much of it due to how much they’ve gained from the union itself), but that’s about it. Europe is much more than Germany, and it may be an impoverished Europe, but let’s all remember that it was Europe that won the war, not Germany.

    P.S.: I’m not saying current day Germany is the same as the 30’s Germany.

  3. On a more serious not, the big problem is the politians. The more of them there are, the more problems appear. USE would be good because of that. Everyone under one rule. Less corruption, less currupt laws, and we would still have state bugdets so there’s no risk of some states paying for the others… Theoretically.

    At any rate, should this result in WWIII, what will happen will probably be a smaller Europe under one rule, so, USE… so, yeah, we should all just skip to the ending.

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