Euro 2012: Why football won’t save the euro
13 June 2012
Who should win the European football championship to save the single currency? Though some are hoping that victory would boost confidence in some countries, the real match-up – with all apologies to sports fans – is far from the pitches, warns SME.
The terminal stage of the crisis is giving not only Europe the shakes, but evidently some forecasters as well. An analyst at Amsterdam’s AMRO Bank describes the hinge that the future will swing on: “The fundamental thing, if the disease is not to spread to the core of the eurozone, is that it would be best if France won the Euro 2012 football championships. This would greatly revive confidence.”
Hmm. Probably he wished to say by this that while the lyrics of the Marseillaise are resonating through the streets, no one will think about heading down to start a run on the BNP Paribas and Société Generale... The question, though, is whether that faith would not be elevated even further if Germany were to win. While the fans – the voters – would be toasting the victory with wine and beer, the ECB would be quietly buying up truckloads of Spanish bonds.
And Merkel, a football fanatic (at the recent G8 meeting in Camp David, the leaders had to take a break while Bayern played Chelsea), would push eurobonds on the Bundestag. What about Greece? Would Tsipras – if they won Euro 2012 – sign off on the memorandum and budget surpluses till 2100 on top of it?
In something, however, the prognosis is prophetic. Though the big favourite to win Euro 2012 is Spain, the AMRO soothsayer expects nothing from a Spanish victory. The reigning consensus is that the country is at the point of no return. And it matters not whether Prime Minister Rajoy is right or wrong in claiming that his country is “collateral damage” of the chaos in the eurozone. Whether it is or not, the crux of the matter is that Spain is on the edge of a bailout.
“Pouring more money into a bottomless pit”
In the meantime, Barclays (and others) are warning that the country’s real estate market “is only half-way” down the road to collapse, and with a fall in prices of a further twenty per cent, which it seems nothing will stave off, “the financial sector will bleed to death.” Add in the highest unemployment in Europe, a fatal distortion of the labour market and debt held by both the private and non-financial sector at 200 percent of GDP, and it immediately becomes obvious, as the Financial Times commentator has long been saying, that “the question is not whether the Spanish economy will rebound in 2012 or 2013, but whether it can do it before the decade runs out.”
Sticking with football, Spain is past saving even if the Primera Division clubs pay the €750 million in back taxes (or benefits) that they owe the government. In Greece, the game is “only” about whether it manages to go bankrupt in an orderly way within the safety net for taxpayers in Europe, or whether it will spill over outside the euro area with consequences that have been calculated by some at one trillion euros and by others as open-ended – ‘infinite’. Still others, meanwhile, go about saying it’s not proper to put such a fright into everyone.
Merkel can no longer wriggle out from under the decision over whether the eurozone tears itself apart this beautiful summer or sweats on under its debt as a federation. And that will be more exciting than Euro 2012 and Bayern–Chelsea put together. While Germany’s Interior Minister (Hans-Peter Friedrich) declares Germany’s unwillingness to keep “pouring more money into a bottomless pit” and the joint head of the Bundesbank (Jurgen Fitschen) calls Greece “a failed State,” the most influential adviser, Bofinger, is arguing that “the Greeks have made the biggest fiscal correction in the postwar era; the reduction in the structural deficit is unique and, I think, excessive.”
Opinions are unsure and divided. The Chancellor is a convinced federalist, but she knows that if she were to shrink back now and give the nod to a pooling of debts, and to do so without a budget Czar in Brussels (i.e., in Berlin) Germany itself will be at the point of no return.
Translated from the Slovak by Anton Baer