Greece is the word
03 July, 2015
The latest deterioration in the Greek situation is unquestionably a concerning development, not least for the people of Greece. But for those 'euro-skeptics' that are again calling this the beginning of the end for the Euro, disappointment lies ahead!
The last time the European Union faced such uncertainty was in 2012. Three years on, the comparisons are few and very far between.
Essentially, different parties are impacted this time around. In order to break the financial linkage between Greece and its Eurozone partners, officials have skillfully managed a transfer of Greece's government debt out of the European banks and into the Eurozone-funded European Financial Stability facility. The debt still exists but this master stroke has gone a long way to safeguarding Europe's banking system from yet another Greek default.
In sharp contrast to 2012, Europe's central bank (the ECB) now stands ready with many more crisis-fighting tools than they possessed back then.
Having visited Europe numerous times over the last three years, the structural improvement across many of the previously questionable EU members has also been impressive.
This was evident again last week when I met with political figures, bank executives, regulators, and central bankers in Rome. During my meetings with former Italian President, Mario Monti, and the Deputy Head of the Bank of Spain, Fernando Restoy, both were quick to catalog the considerable steps their countries have made to rejuvenate their domestic economies. These tough but necessary structural reforms have already begun to bear fruit. Growth rates across much of the 'periphery' are now showing signs of steady improvement. Conversely, Greece's recently elected anti-austerity Syriza party has resisted, or worse, reversed many of the reforms its former ruling party had begun to implement.
Therein lies the rub. While the Greeks have chosen a different path to date, much of the Eurozone has taken Winston Churchill's advice and not let a good crisis go to waste.