Not my opinion, but that of a respected journal, Euromoney. In an article in the January edition, entitled Europe: Will Europe burst asunder?, they analyse the forces pulling Europe's economies apart. Important points include
- Dividing the countries by current account surplus or deficits produces roughly equal size “half-Europe” economies in which the surplus countries’ current accounts are 5.5% of GDP and the deficit countries’ 3.3%.
- Without French and Spanish (and UK) growth, the already feeble performance of the euroland economy would have been a disaster, and the German transition to competitive labour costs would have crumbled into deflation.
- Financial imbalances reflect labour-cost and other divergences that threaten the integrity of EMU.
- Spain’s output/worker has barely increased in the past decade.
- The domestic boom was based on housing, borrow-and-spend and building. Housing affordability remains fine, as the euro’s “one size fits none” interest rates subsidize Spanish borrowers, but household debt has rocketed this decade from 60% of disposable income to 130%
- Italy needs to leave the euro to have much of a chance. But how?
The people who were willing to enter this Euro experiment, for their own glory, and for the pursuit of a nebulous goal of every closer union, have been shown up for the irresponsible louts they are. The lives of countless people, help to ransom, for the vanity of the elite.
Thanks to Steve for sending me the article.