Eurozone Crisis: Not a Greek Drama - 0 views
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Lost in the coverage is the fact that Greece constitutes 2.5 percent of Eurozone GDP and Eurozone member states’ direct exposure to Greece is manageable.
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After a year and a half of watching the Eurozone sovereign debt crisis unfold, we should put one notion to rest: no one event, crisis or decision will cause the Eurozone to collapse. Such a complex system of financial and monetary relationships will not unravel in a day, a month or a year.
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Skeptics contend that because the Eurozone was primarily a political creation, its economic logic is fundamentally flawed. A singular economic or political shock — such as the collapse of the Greek government — could therefore unravel the entire bloc by exposing a slew of economic problems.
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Precisely because the Eurozone is a political creation, however, fundamental changes in the geopolitics of Europe are required to undermine it. Furthermore, the greater the imminent financial crisis, the greater the likelihood that Eurozone member states will find flexible means to resolve it. This resourcefulness has been evidenced throughout the crisis.
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The idea that the ECB would participate in its own dissolution because it is committed to its independence, or to maintaining 2 percent inflation, is a theoretical assumption that takes little account of the ECB’s behavior over the last 24 months.
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Second, fundamental political changes underway in Europe — such as the weakening of the NATO alliance, the regionalization of security alliances, and especially the developing Russian-German relationship — are far more important to the future of the Eurozone than a Greek confidence vote.
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Because the Eurozone is fundamentally a political project, the weakening of the political bonds that tie Eurozone member states into a currency union are what will ultimately lead to its dissolution or modification.
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Monumental shifts are underway in Europe. We have no reason to believe that Greece is at the center of them. What is most interesting is that the focus, both in terms of risks and solutions, continues to be on both short-term effects and singular events. This myopia is in part because Eurozone member states, in particular Germany, have not offered a long-term solution or plan.
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The question that needs to be asked is: what do Europeans, and specifically the Germans, plan to do with Europe’s security and political architecture in the long term? The answer to that question cannot be found in the financial databases of Eurostat or the Bank of International Settlement, nor especially in the coverage of 24-hour investor-news stations.
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"It has been 2,000 years since Athenian legislators last received the kind of global attention fixed upon them Tuesday. News coverage of the Greek parliament's June 21 confidence vote captivated the global financial sector. The vote was carried live on most global 24-hour investment-news stations and links to live online feeds of the Greek vote were posted across the world wide web. The vote passed, giving Greek Prime Minister George Papandreou the political authority to try to pass further austerity measures mandated by the Eurozone in another vote on June 28."