Another week, another crisis in the eurozone. Another last minute deal and another hundred billion or so tossed at the bankrupt Greek government. It's an odd way to run a whelk stall, and makes you wonder how long it can go on. The consensus among the British press and politicians this week is that it can't and that the euro is a busted flush. Ha ha – told you so.
Mind you, British opinion formers have confidently predicted the demise of the euro repeatedly over the last few years and the single currency somehow survives. And if you go abroad this summer you'll find that the euro is not only still around, it's worth a great deal more than the pound. It remains one of the world's reserve currencies, which suggests that someone somewhere still has confidence in it.
So, has anything changed after this latest bail out – the second “final solution” in six months? And should we bother about it anyway, since Britain declined the euro?. Well, I think something pretty fundamental has changed through this sovereign debt crisis, if only because the countries of Europe have looked into the abyss and decided that there is no alternative but to keep the euro almost at any cost. We can't go on basing policy on the complacent expectation that the euro will somehow go away. It won't.
On Thursday, President Sarkozy and Chancellor Merkel agreed once again to save Greece from default by another massive loan. In the financial world this is called “kicking the can further down the street” - i.e. putting off the inevitable Greek default. Though it's a pretty long street and a pretty big can. Greece will now be able to borrow at 3.5% over 30 years, instead of at 16% for 30 months as it does now. Greek bonds now have the backing of France and Germany – two of the greatest industrial powers on the planet.
