(Telegraph) Roger Bootle–The final death throes of the euro?

The euro crisis is entering its final stages. Economic pain is now interacting with political resistance to produce intense financial pressure. I expect Greece to leave the euro ”“ and perhaps very soon.

It could happen voluntarily, but both the Greek people and Greek politicians are still clinging to the idea that they can put an end to austerity yet still stay in the euro. In order to try to achieve that, a new government may call the eurozone’s bluff.

At that point, the other eurozone members would face an awkward choice. Doubtless there would be voices in favour of providing the money, willy nilly. That might well be the French position. But if the eurozone gives way on this, what chance would there be of painful austerity being continued, not just in Greece but also in Portugal, Spain, Italy and Ireland? The northern countries would face the prospect of pouring money into a bottomless pit.

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Posted in * Economics, Politics, * International News & Commentary, --European Sovereign Debt Crisis of 2010, Consumer/consumer spending, Corporations/Corporate Life, Credit Markets, Currency Markets, Economy, Euro, Europe, European Central Bank, Foreign Relations, France, Germany, Greece, Italy, Politics in General, Portugal, Spain

3 comments on “(Telegraph) Roger Bootle–The final death throes of the euro?

  1. Militaris Artifex says:

    There is no pathway out of the hole that many of the Eurozone countries have dug themselves into (thinking particularly of the PIIGS) that is both economically viable and less than severely unpleasant. Unfortunately, we in the United States are, if not in the same boat, very likely in a boat lashed to theirs thanks to the expressed policy of U.S. participation in granting loans to the Eurozone nations through the IMF, [i]etc[/i].

    A [url=http://rwer.wordpress.com/2011/07/14/chart-of-the-day-debt-to-gdp-ratios-for-eu-countries/]chart of 2009 & 2010[/url] Debt-to-GDP ratios for ten of the Eurozone countries, plus average ratios for the Euro area (17 countries) and the EU (27 countries), shows that as of the end of 2010 both Greece and Italy had ratios greater than unity (1.0), and both countries’ ratios were over 100% of GDP (Greece by more than 140%, Italy almost 120%). The one factor of which I am not certain is whether or not the GDP calculated the data provider (Eurostat) calculates GDP in a fashion similar to what is done in the U.S. (official U.S. GDP values include government expenditures, which is at least somewhat misleading as government does not, in fact, produce very much that is of monetary value. Additionally, U.S. GDP only includes final products, the value of intermediate products are not included in the statistic.)

    If the Eurostat GDP is calculated similarly to the calculation of U.S. GDP, the situation is actually worse than the figures might suggest.

    Pax et bonum,
    Keith Töpfer

  2. MichaelA says:

    [blockquote] “Unfortunately, we in the United States are, if not in the same boat, very likely in a boat lashed to theirs thanks to the expressed policy of U.S. participation in granting loans to the Eurozone nations through the IMF, etc.” [/blockquote]
    Don’t just blame the IMF. There are plenty of other reasons why Greek loan defaults (which are a seperate issue to the Euro) will impact on the USA.

    But also, don’t complain: If you live by the loan you have to be prepared to die by it also.

  3. Militaris Artifex says:


    I didn’t just blame the IMF (did you not note the [i]etc.[/i]? which you included in your quote of my original comment). I was simply not going to spend the time Googling all of the other ways we have enabled the Europeans to live beyond their means. And, as a Hayekian Old Whig and student of Austrian School economics, I [b]vehemently abhor and oppose[/b]: the manipulations of the U.S. currency system by the Federal Reserve, fiat monetary systems (including that in the U.S.), and government interference in the marketplace, ([b]including ours[/b]), with [b]the only exceptions[/b] being rigorous enforcement of the [i]Rule of Law[/i] and strict protection of property rights, free association and free exchange—no other exceptons permitted.

    The evils produced by the abandonment of those principles is, I believe, the primary proximate cause of the fiscal crisis which the U.S. faces today. Unfortunately, a majority of my fellow citizens who vote appear to be blind to the way in which the world works, and continue to succumb to the siren call of the government politicians (in both major parties) who continue to promise them bread and circuses, and do so as Bastiat suggested would be the case, at the pretended expense of everyone else. Hence, we end up with [b](a)[/b] a unit of currency which loses more purchasing power with every passing year, such that in the past 100 years it has lost more than 90% of its value, and [b](b)[/b] an economy mired in the stagnation that comes from massive malinvestments caused by Federal manipulation of the supply of intrinsically worthless paper money having no value beyond the promise to exchange worn out pieces of not very colorful pieces of fabric for new and unworn pieces of not very colorful pieces of fabric, both fraudulently alleged to be money.

    I know not what you were reading into my comments but, insofar as I can see, my initial comment said nothing to indicate I thought the U.S. was in any safer position than the EU countries. I was simply suggesting that the fall of any of the Eurozone countries economies may well trigger a collapse here, a situation quite possibly very similar in kind and magnitude to that which last occurred in 1929. Not a pleasant prospect, and also not an unforeseeable one for those who have eyes to see.

    [i]Pax et bonum[/i],
    Keith Töpfer