Another stress test for the Euro

There is a consistent argument amongst analysts that highlights the flawed structure of the Eurozone. Most of these analysts covering Grexit must have British blood in their veins, which is understandable given the relative success of the UK economy. Life must have treated the rest quite badly.

It is understandable for the British to disapprove of the single currency union. After all Britain was able to bounce back from the financial crisis by being nimble and agile. While, on the other hand, the Eurozone is still carrying lead weights shouldered since 2008.

But probably that is the whole point; the financial crisis, that started in 2008 and is still not exorcised, would probably have led to the collapse of several European states along the way if the Eurozone was not in existence.

The fact that Ireland, Spain, Portugal and Italy are today functioning states may, at least partially, be attributed to a concerted effort by the Eurozone community and ECB intervention. Ireland in particular is doing very well.

Greece was dealt the worst cards, but it has to be said that the effort from Greek governments has rarely been forthcoming. Greece is now playing a ‘democratic’ card, while ignoring that all EU countries are democratically elected. Some have also gone through harsh reforms like (surprise, surprise) pensions cuts, government worker layoffs and wage cuts.

These countries are now doing better; Ireland, Spain, Romania, Cyprus, even Britain went through voluntary austerity measures. And if Britain deemed it necessary to reform and adopt austerity, I do not see why less efficient countries cannot follow. The Greek people have celebrated their intent to reject austerity as if anyone wants austerity. Meanwhile this week, Britain has announced further reform and austerity measures.

The Eurozone is flawed, but which union or organization is not. Is the United States not flawed? Congress and the government have been unable to agree on most budgetary measures since Obama came to power.

Sometimes analysts tend to forget that not everything is about the next market rally. Economies, nations and economic unions tend to survive beyond the current market cycle. While it is easy to argue against the limits imposed by the Euro and against the bureaucratic monster that the EU has become, at least the EU and the Euro constantly force European member states to compromise instead of open conflict.

The Eurozone is a dream that was born flawed, but has already served much purpose by bringing European nations closer, forcing economic reform, imposing financial constraint and even going as far as serving as a reason for bailing out countries.

There are those who feel that certain countries would be better off having their own monetary authority and their own currency. These arguments unfortunately assume that these countries are unable to maintain adequate discipline to achieve economic success. Ultimately these arguments imply inefficiency and long-term economic mediocrity.

Each crisis will test the structures of the Eurozone and will expose defects. The Eurozone will survive if it is able to adapt, improve and reform, even if in a slow and haphazard fashion. In the end the Eurozone’s success will not depend on the depth of each crisis but by the ability of member states to keep the dream alive; whatever it takes.