The beginning of the end of the Euro

In our last posting, we spoke about some of the technical concerns underlying the solution that had seemed all too temporal, in the problems of the Euro.

Today we hear that the Greek government, on whose behalf the Prime Minister had accepted the deal, may itself be close to failure. Apparently, the Greek Finance Minister has now changed his position on the suggested referendum, recently put forward by the Prime Minister. This referendum was proposed, one feels, as a matter of conscience on the part of the PM, in light of the austerity it would continue to impose on the Greek people.

Given that inevitably that question has to boil down to one of principle: should Greece be in the Euro or not? The PM is, at time of writing, looking like he may not survive the vote on whether to proceed with the referendum. The leaders of the Eurozone, notably France and Germany are stating that the first tranche of bail out funds will now not be paid, leading to effective default on the part of Greece, increasingly unable to pay its debts.

Some thinkers have now begun to rationalise what many of us have been saying all along – that the Eurozone will be little worse off without the Greeks. No bail out fund until a decision on the referendum, and if the answer is the wrong one, then no bail out fund period: Greece will default more legitimately than this slow strangulation, and return to the Drachma.

With the loss of its weakest member, the Eurozone could consolidate and strengthen…or unwind completely. We are at the end of the beginning, but of exactly what, remains to be seen…

Author: Damian Merciar

Damian Merciar is Managing Director of Merciar Business Consulting, http://www.merciar.com, a niche business economics consultancy founded in 1998. He has over twenty years experience in the areas of commercial Business Strategy. He is experienced in the transition environments of nationalized to private sector state utilities and the senior practice of commercial management, advisorial consultancy, and implementation. He has carried out policy advisory work for government ministries and been an adviser to institutional bodies proposing changes to government. He holds an MSc Economics from the University of Surrey’s leading Economics department and an MBA from the University of Kent. Also attending the leading University in the Middle East, studying International Relations and Language, for which he won a competitive international scholarship, and has a BA (Hons) in Economic History and Political Economy from the University of Portsmouth. He is currently based in London. View all posts by Damian Merciar