Wednesday, April 04, 2012

Grexit is exit for euro.

The European single currency and the Sunday Herald are the same age. Both entered the world on January 1999, a coincidence our first editorial thought highly auspicious. To be honest, while most observers thought the euro was here to stay, they weren't so confident about the fate of the first new Scottish quality sunday paper in over twenty years. Well, the Sunday Herald is still here, but incredibly there are now serious doubts about how much longer the single currency will survive. The great liberal project that was supposed to bind the nations of Europe together in economic harmony seems to have hit the rocks.

The Governor of the Bank of England, Mervyn King, isn't exactly renowned for telling it like it is, but he hit the mark last week when he expressed his dismay at the European Union “tearing itself apart without any obvious solution”. It's as if Europe's political leaders no longer possess the will to make it stop. There is a fatalism seeping through the corridors of Brussels and Strasbourg about the hitherto unthinkable prospect of Greece actually leaving the eurozone. The euro, like diamonds, is supposed to be forever, but last week the German finance minister, numerous central bankers and even the head of the IMF were openly speculating about Greece restoring the drachma. There is talk of a “Grexit” - an “orderly” departure.

It is likely to be anything but. Make no mistake, the Greek people, who go to the polls again on June 17th, are holding a gun to the head of the entire European financial system.