The Euro


The euro, the single currency of the European Union, had bitter enemies since it was conceived. Many respected economists who insisted on talking about it was seen, until recently, just as an ominous voice. One example is the French Jean-Jacques Rosa, founder of the Institute of Political Studies (IEP) of SciencesPo in Paris. He released the book «Euro: How to get rid of it» (Publisher Grasset), which states that the coin is not only an obstacle to the growth of the French economy, but "the biggest mistake of Europe." Skepticism is a mild word to describe the reception to his work on the continent.

Throughout the year, however, this scenario has changed. The Greek crisis has made studies "anti-euro" in French, Germans and Italians were taken from the bottom of the bookcase and analyzed by hard economic teams of the leading countries of the European bloc, France and Germany. When it swelled evidence that the economic situation of Italy might flee to control, it emerged that the lucubrations of academic yore now feed real political debates. Reuters has published news stating that the talks between the two largest economies in the euro zone have been happening for months, at all levels of government, and which of them has resulted in a list of countries "undesirables" in the block. "We need to establish the exact list of who does not want to be part of the club and those who simply can not take part," said a representative of one of the countries told Reuters. Soon it occupied other important headlines from international publications.

According to Irwin Collier, professor of economics at the Free University of Berlin, some members of the CDU, the party of German Chancellor Angela Merkel, have talked about opening a poll for the European members receive permission to leave the euro zone, without having to leave, necessarily, the European Union. "We still do not talk openly about it, especially because Merkel is very careful. But it's getting hard to imagine any other solution for the Greek economy, "says Collier.
After 19 years of the creation of the European Union and 12 implementation of the single currency, it became clear that the pillars of the system have large cracks. An abyss separates agriculture and industry in countries such as Germany and Portugal, which use the same currency, without having the same economic strength. The condition worsens when one notes that there is also no tax parity between countries. More serious still is the fact that the bloc's nations beautified their public accounts, such as Greece, and others who borrowed beyond measure, such as Portugal and Ireland. "In the euro zone, committed a serious error to put the monetary system ahead of the political system," says Collier.


In this context, Italy has an emblematic role. The country's debt is 120% of Gross Domestic Product (GDP), down from 190% in Greece. The external debt reaches 24% of GDP, the same level as countries like Britain and the United States - and well below the Spanish debt, for example, which already reaches 96% of GDP. However, the suspicion hanging over the Italian peninsula if the country is able, in 2012, to honor the interest payments on its debt, worth 300 billion euros. With interest rates (which are the rates of return on debt) exceeding the 7.5% per year, it appears that investors are demanding a much higher premium to buy the bonds and that the country will have difficulty issuing new roles to capture the billions that will be needed next year. The market does not trust the ability of Italy to manage their accounts and public debt.

The continuity of the Euro is still being debated and it seems to be a discussion with no end on sight.