At last even José Manuel Barroso, president of the European Commission, has finally admitted that the Eurozone crisis isn't over. Welcome to the real world, Senhor Barroso!
At the start of the year, Barroso insisted that the Euro had been saved and that the worst of the crisis was over. You don't need a degree in economics to see that this was a triumph of wishful thinking over hard reality - the underlying problems that caused the problem in the first place are nowhere near resolution.
There is some economic data which could be used to "spin" a positive picture. Borrowing costs for the Italian and Spanish goverments are both significantly lower than the danger levels reached last July, and the Greek government actually recorded a fiscal surplus in January (in layman's terms, they received more tax revenue than they spent.) The Irish government is able to borrow from the market again.
However, look behind this selected economic data and it's a very different picture. Unemployment has climbed to over 25% in boith Greece and Spain with youth unemployment over 50%. Greece's fiscal surplus was achieved by cutting spending to the bone, forcing public sector workers to accept pay and pension cuts and leaving hospitals desperately short of drugs. In the private sector, as many as 170,000 small businesses are fearful than they may be forced to close down this year.
Spain's crumbling property market still has further to fall, according to experts, and even Ireland, the "poster boy" for the success of Eurozone austerity measures, is not seeing any sign of a recovery in its housing market, where prices have fallen 30% in three years.
The voters in "Club Med" are not happy, and uinderstandably too. If an election were to be held in Greece today, nearly 40% of voters indiciated they would support the extreme left SYRIZA party or the extreme right Golden Dawn. The Italians recently held a general election and 25% of the electorate ignored all the mainstream parties and instead plumped for the Five Star movement of comedian Beppe Grillo a protest party pure and simple. Consequently Italy is going to have struggle to put together a viable government at a time when its economy is contracting.
However, still more significant is the emergence of an anti-Euro party in Germany. Unlike the Five Star movement or the thugs of Golden Dawn, Alternative für Deutschland has a solid intellectual leadership of academics and economists, and its message is clear - the Euro should be wound up and replaced by either smaller currency unions or national currencies. The appeal to German voters is immediate - if the Euro carries on in its present form, they are going to end up digging into their pockets to bail out at the very least Greece's banks, Cyprus's banks and Spain's banks. Furthermore, France's economy, which has been living on the never-never for years, is looking wobbly. Did the Germans abandon their highly succesful Deutchmark to shack up with bedfellows like this? German grumbling about the Euro goes back almost to day 1 of the single currency. However, until recently, it has had no political outlet. Angela Merkel is desperate to keep the Euro together and desperate to be re-elected later this year. Italy's political instability could erupt in her face, while rumours that the Greek military have been contemplating a coup won't go away. However, if AfD get their act together in time, the biggest threat may be lurking in her own back yard. One way or other, like a dormant volcano, the Eurozone crisis is going to erupt again, but also like a dormant volcano, predicting the timing is beyond the capabilities of the experts - let alone an amateur like me.
At the start of the year, Barroso insisted that the Euro had been saved and that the worst of the crisis was over. You don't need a degree in economics to see that this was a triumph of wishful thinking over hard reality - the underlying problems that caused the problem in the first place are nowhere near resolution.
There is some economic data which could be used to "spin" a positive picture. Borrowing costs for the Italian and Spanish goverments are both significantly lower than the danger levels reached last July, and the Greek government actually recorded a fiscal surplus in January (in layman's terms, they received more tax revenue than they spent.) The Irish government is able to borrow from the market again.
However, look behind this selected economic data and it's a very different picture. Unemployment has climbed to over 25% in boith Greece and Spain with youth unemployment over 50%. Greece's fiscal surplus was achieved by cutting spending to the bone, forcing public sector workers to accept pay and pension cuts and leaving hospitals desperately short of drugs. In the private sector, as many as 170,000 small businesses are fearful than they may be forced to close down this year.
Spain's crumbling property market still has further to fall, according to experts, and even Ireland, the "poster boy" for the success of Eurozone austerity measures, is not seeing any sign of a recovery in its housing market, where prices have fallen 30% in three years.
The voters in "Club Med" are not happy, and uinderstandably too. If an election were to be held in Greece today, nearly 40% of voters indiciated they would support the extreme left SYRIZA party or the extreme right Golden Dawn. The Italians recently held a general election and 25% of the electorate ignored all the mainstream parties and instead plumped for the Five Star movement of comedian Beppe Grillo a protest party pure and simple. Consequently Italy is going to have struggle to put together a viable government at a time when its economy is contracting.
However, still more significant is the emergence of an anti-Euro party in Germany. Unlike the Five Star movement or the thugs of Golden Dawn, Alternative für Deutschland has a solid intellectual leadership of academics and economists, and its message is clear - the Euro should be wound up and replaced by either smaller currency unions or national currencies. The appeal to German voters is immediate - if the Euro carries on in its present form, they are going to end up digging into their pockets to bail out at the very least Greece's banks, Cyprus's banks and Spain's banks. Furthermore, France's economy, which has been living on the never-never for years, is looking wobbly. Did the Germans abandon their highly succesful Deutchmark to shack up with bedfellows like this? German grumbling about the Euro goes back almost to day 1 of the single currency. However, until recently, it has had no political outlet. Angela Merkel is desperate to keep the Euro together and desperate to be re-elected later this year. Italy's political instability could erupt in her face, while rumours that the Greek military have been contemplating a coup won't go away. However, if AfD get their act together in time, the biggest threat may be lurking in her own back yard. One way or other, like a dormant volcano, the Eurozone crisis is going to erupt again, but also like a dormant volcano, predicting the timing is beyond the capabilities of the experts - let alone an amateur like me.