2. dude said...

Interesting start to Wednesday indeed, reading about Iceland! But then back to Greece. Of course you know what you are going to get when you read the Telegraph. Doom and gloom and all that wishful thinking about when the Euro is going to die and then, (please, please, please God let this happen they think) the EU is going to crumble.

But seeing this from the other side of the coin (ie as someone who not only believes in the EU but sees the Euro project as a good thing) I see these events as very interesting. There is strong political support for the Euro, and so lots of incentive to come up with imaginative (=fudges?) solutions to keep the project going. This is the first real test of the currency since its launch just over a decade ago, and so it was always the case that issues such as this would need to be addressed.

So what I am saying is not to look at this as the start of the cracks that pull the edifice down, but more the start of the process to remould the eurozone into a more integrated fiscal environment. The disconnect between interest rate policy controlled by the ECB and fiscal policies still in the hands of the eurozone member states was always going to raise tensions like these sooner or later. I think how Europe mutates to accommodate these will be the most interesting aspect of this.

Still, which ever side of the fence you want to be nailed to the one thing everyone can agree on is that it won't be boring!