Since several weeks I think about writing this post hoping that it would be irrelevant prior to publication but unfortunately it is not.
As some commentators have written (including Paul Krugman, Nobel Prize), the Euro is virtually dead and this is perfectly illustrated by the reaction of bond markets in recent weeks. We lived for ten years on the illusion that the euro zone was a single homogeneous monetary entity despite the diversity (if not divergence) of the different countries that compose it. The large lenders did also no significant differences between countries and that helped Greece, for example, to go into debt beyond the reasonable without making its economy competitive.
When the situation became unbearable, our leaders have found themselves faced with a choice between two solutions:
- Maintain the illusion and collectively buy the Greek debt via the ECB or the EFSF. This was the solution proposed by France to make it simple.
- Break the illusion and ask lenders to take responsibility in the form of debt discounts. The solution was driven by Germany and has been finally adopted.
Why the German elite, yet very pro-European, pushed Greece to default despite the collective risk that entails? Because they feel immoral for a country which has made no effort to be "saved" by the community and those who took risks (the lenders, say all European savers) are not penalized.
So on behalf of morality, Europe, so the economic powerhouse of the world (remember that (Germany + France)> China), is driven in uncharted territory with the consequences that we start to measure. However, it was clear that the situation ante was unsustainable in the medium term, as based on an illusion and not on a reality. The urgent need now is to find a long-term solution to reconcile a single currency and the fact that it is shared by 17 "sovereign" nations and if no solution is agreed by all peoples is the great leap into the unknown. Another option would have been to find a solution by first saving time, but the moral Lutheran has decided otherwise.
The German financial and political elite, particularly one of its most iconic Wolfgang Schäuble, is well aware that now one of the major construction of European unity is in danger and need to move quickly if the it does not want everything ends badly. He proposes to redefine the model of integration in the Euro zone (or what will remain of it) and the upcoming discussions around this new model and its adoption or rejection will shape the collective destiny of Europeans.
