Saving the euro

When it comes to the future of the eurozone, a quick flick through the annual reports of Europe’s top ten life insurers is revealing. Not one of them suggests that a break-up of the eurozone is a likely scenario. They don’t even give much credence to the oft-mooted suggestion that Greece is about to leave the once-cosy club.

The general feeling is that the break-down of the single currency is too calamitous for politicians to ever really let it happen. To see the truth in this, all one has to do is look at the flak German chancellor is taking at home for allowing herself to be blackmailed by these Southern European ruffians. As soon as the sovereign debt crisis started to spread beyond Greece’s borders, she quickly realised that attaching tough conditions to bail out packages was not going to fly.

Germany managed to knock Greece out of the Euro 2012 football championships, but Spain ultimately took home the trophy. A reflection, perhaps, on how Merkel is now dealing with these two wayward countries.

One senior risk manager from a European insurer told me, “Speculating about Greece in and out is just nonsense. The euro is what it is, and we have to live with that. We have to deal with this crisis, not think about what would happen if the single currency had never been created in the first place.”

I have some problem with policy being shaped through fear rather than pragmatic incentives – a single currency bound together through fear of an alternative is certain to be less effective than one in which the citizens actually believe – but the fact that Europe’s large investors refuse to entertain the notion that the currency may collapse is perhaps one of the clearest indications that it may yet be saved.

For this to happen, there must be closer fiscal centralisation. Steps in this direction are already happening. Europe’s voters may not like this, but the answer from the ruling elite may simply be “tough”.

Will Europe’s voters just shrug, as they have in times gone by, and allow politicians to save their flawed monetary experiment – at whatever cost? Or will they take Arms against a Sea of trouble and by opposing end them?

That, to me, seems the 64,000 euro  dollar question.

Last year’s company annual reports may have just answered that question, expressing a touching faith in Europe’s politicians to whip the naysayers into line.


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