The political situation in Greece last Monday made European markets dance.
However, while the Athens stock market collapsed by 10 points and the interest rates on government bonds rose sharply, the fear that the crisis will spread to Italy and Spain remained limited. Is it proof that the crisis is behind us? Did the crisis abate due to Christmas? No.
ECB President Mario Draghi has control and the markets know it. In September 2012 the central banker ended definitively on economic tensions by announcing he would do everything to prevent the transmission of the crisis and the banking crisis.
The euro crisis is a debt crisis. If there are tremors at every bad policy development it is because the debt of a country is unbearable. It is because it has subdued growth without economic activity without taxation. It is because although public spending has decreased, the budget situation has not been ameliorated so that a country returns what it borrowed and decrease debt. In Greece after two revisions of debt that reduced almost half the amount, debt is 176% of GDP. In Italy, the national debt is 130% of GDP. In most European countries the public debt rises despite austerity or rather ... because of austerity measures.
How can one cure the evil and not just the symptoms? Can the Union share a common currency but not share the risks. If for example, the area of the Pyrenees in France, where unemployment rose by 50%, had to face the lenders without the help of other richer regions, it would have gone bankrupt long ago and embroiling even the French capital in the fall.
But in Europe, the problem is political. Similar discussions took place in the US when all states of the Union came to adopt the dollar. It took 150 years to complete the monetary union of America based on a union budget. It is therefore natural for Europe to take time and it is natural that the discussion will cause political tensions between supporters of union and rivals.
The difference is that today markets set the tone and impose timing. So the question is: How long will a sick stomach continue to bear swallowing anti-nausea medicine? "
The article is signed by Anne-Laure Delatte
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