Daniel_Plainview wrote:smiley wrote:But with that disclosure on the table, I still think that the Euro crisis is running out of steam.
It depends ... it depends on any combination of the following:
Amid these considerations, no one can predict the ultimate fate of the Euro ... however, a very strong argument can be made that the Euro's days are numbered.
In the end I think there is only one way to run a government budget. You run a surplus in good times and only in very special cases you may run a temporary defict (and pay it back). In no way you start of with a budget that is based on compensation of deficits by economic growth. I think we agree on that.
But you forget this is a beautycontest in a pig barn. You don't have to look a million bucks to make the cut.
For now the most critical thing to avoid a crisis is to get the European finances in a shape that is acceptable for the economic world. You can talk about all types of reform and austerity, but if you are unable to rollover debt then it is game over.
Acceptable means that you have to equal the countries around you, plus you have to do a bit better to restore confidence. Looking at the current situation I think is on track to meet that target thus averting a catastrophal breakdown. But that does not mean that there are no significant challenges in the (near) future. To name a few:
- aging populations.
- a financial system that is generally unsustainable.
- a macroeconomic theory and belief system that is plainly wrong.
These will certainly hit us and probably all at once, but those I see as global problems rather than Europe specific.