Euro crisis

To make the Eurozone more stable, it would be desirable to have stricter and enforceable rules. But because it is so unstable, no such rules can ever be introduced.

Europe will face difficult monetary conditions for years to come. If the bank is unlucky, inflation expectations will solidify, and rapid price increases will become a permanent feature for the Eurozone.

Just as Europe’s economies are emerging from the Covid-19 recession, the next big European crisis is already visible on the horizon. It is just not clear what kind of crisis it will be: another debt crisis, an inflation crisis, or a combination of both.

The times of economic reason and rationality are long gone in Europe.

The picture emerging for Europe is worrying. Maybe a big wave of insolvencies will wash over the continent right when the public might have believed that the pandemic recession is over.

Europe’s crisis was bad but not as bad as it could have been. Still, the worst is yet to come.

The great irony is that Donohoe now gives Germany a Eurogroup President who embodies Berlin’s own policy inclinations like no other. And yet, the new president will not help with Germany’s goal of keeping the Eurozone united during its stewardship of the EU this year.

Some problems are too complicated to cause the fear they deserve – like Target 2, Europe’s trillion euro time bomb.