Euro crisis

The biggest loser in Greece’s snap election was not even on the ballot paper. It was German Chancellor Angela Merkel whose austerity policies in the euro crisis were rejected by Greece’s swing to the radical left.

The most important question of what the Greek election result will mean for the euro crisis has not been answered satisfactorily. There is no easy answer to this question, only a range of different scenarios. As of today, it is hard, if not impossible, to put probabilities to them.

Europe’s central bank has manoeuvred itself into a hole and the introduction of quantitative easing shows that it won’t stop digging. At least the Swiss National Bank got out before being dragged down any further.

By demonising ‘deflation’ (even if it is really just price stability by another name), the ECB underlines its commitment to helping the eurozone’s debtors, whether they are financial institutions or governments. The response to this so-called deflation threat will be to maintain interest rates negative or even embark on a program of quantitative easing, which may be announced over the coming days. In effect, however, such policies are just bailout programs by stealth.

Should the 25 January elections result in a Syriza-led government, we will find out whether the Germans can actually succeed in kicking Greece out of the euro and also whether their optimism about being able to contain the crisis in Greece was justified.

At the risk of sounding like a broken record, the eurozone is an unworkable construction which will condemn its members to repeated crises like the one first experienced in Greece. It is not too late to end this disastrous experiment.

In late 2009, Greece started the eurozone crisis. Five years later, the country’s problems are still large enough to trigger the next big eurozone disaster.

The ECB’s big experiment with negative interest rates is finally reaching ordinary people and two things are ironic about it: First, that it was a bank with a hint of gambling in its name which finally drove this message home. And second, that of all weeks in the calendar it had to happen during world savings week: the last week in October when European banks traditionally pretend they like to manage assets and encourage savings. If only.