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Monday, 26 January 2015

“If the British want to get out of the EU, then so be it”. My reaction to the Op-Ed of MEP Peter van Dalen, representing the Dutch confessional parties SGP and CU

Yesterday, the Dutch Member of European Parliament Peter van Dalen, who represents both protestant parties SGP and ChristenUnie (i.e. Christian Union), wrote an Op-Ed to the daily newspaper De Volkskrant. 

In this Op-Ed, he held a heartfelt plea to keep the United Kingdom in the European Union, by giving in to their worries and agonies against the EU.

The key question of his plea was: 

“Why do we worry so much about Greece, when it possibly leaves the Euro-zone and so little about the United Kingdom, when it threatens to leave the EU? For The Netherlands, the UK is so much more important than Greece”.

As this is a valid and very topical question, I will try to answer it. 

Here I print the pertinent snippets of Van Dalen’s Op-Ed, accompanied by my comments:

 These days we are talking again about a ‘Grexit’: a possible departure of Greece from the Eurozone. What surprises me, is that this possible departure gets so much more attention than another possible departure: that of the UK from the EU – a Brexit. Both for The Netherlands and the EU as a whole, a Brexit is so much worse; a nightmare. The EU, as well as the Dutch government should go all the way to prevent the United Kingdom from making their Brexit.

My comments:

First, together with Greece we are all involved in arguably the largest monetary experiment of all time. When one of the participants is threatening to leave the Euro, this is a worrisome development for the stability of this whole Euro ‘experiment’, as it could lead to a future implosion of the currency. The United Kingdom leaving the EU simply isn't such a worrisome development.

Second, the British have never entered the EU at full force and with much enthusiasm. From the beginning it seemed like a shotgun wedding with mutual benefits, but no real love between the partners. 

The British have always been looking for their own special rebates, their own special privileges and their own emergency exits from union regulations, when the going would get tough. This behaviour has dramatically increased since David Cameron has become the inhabitant of 10 Downing Street.  

Besides that, I really miss the nightmare point of the Brexit. In my humble opinion, the UK and the other European, export-driven countries could continue their commercial, financial, industrial and agricultural trade, without many additional boundaries. 

Especially, as the British economy remains to be a mainly finance-based economy, with the City of London lightyears ahead of the rest of the country in economic sense. The UK exports financial services and imports goods and agricultural produce and it will probably continue to do so after a Brexit.

It is my conviction that many Europeans already moved on, with the concept of a Brexit in mind and that in their heart not too many people really care about it. To these eyes, the country was never really part of the team after all. Can I be wrong? I can be wrong!

What is going on? This year, there are elections in England. The British PM David Cameron promised that if he would be re-elected, he will organize an in/out referendum with respect to the European Union. Until that moment he will try to reform the EU. 

Will he succeed in his reform plans, he will advise to vote for an Opt-In (i.e. the UK should stay within the European Union); when he does not, he will advise to vote for an Opt-Out (the UK leaving the European Union). The public opinion in the UK is divided 50-50 at this moment.

My comments: No matter how you call this, it is political blackmail: “Do as I tell you, or my country will run away”. This would be a license for the British to change the EU towards their own image. Did somebody ask how the other 270 million European citizens think about that?! 

Many Europeans are already sick and tired of the German yoke upon the EU and will go definitely short on the EU 2.0, that David Cameron has in mind: a free trading zone with all the benefits for the British and no burdens, aka an egoistical EU.

For the EU and The Netherlands, a departure of the British would be desastrous, from a political and economic point of view. First, the EU loses a net-payer. The loss of the British net-payment to the EU would have to be compensated by all member states and would cost The Netherlands already €275 million per year. 

The trade between The Netherlands and the United Kingdom would get hurt. Trade between The Netherlands and The United Kingdom amounted to €62 billion in 2012, with for us a surplus of €7.3 billion. Even a small dip in this trade would cause millions in losses.

My comments: Let’s take a look at that... 

First, the UK is indeed a net payer of the EU, according to this article based on 2011 data, albeit not so much as Germany and France. Nevertheless, the United Kingdom pays a very substantial amount to the EU.

However, it seems somewhat strange to think that the EU administration would burn up the same amount of money without the UK, as with the UK. The UK leaving the EU would definitely mean that the EU could operate at less expenses. Summarized: although the revenues for the EU administration would decrease, so would its expenses.

The real reason for The Netherlands to cry about the possible British departure, is the Dutch trade portfolio. The Dutch bird can seemingly only sing one tune and that tune is called: “Exports”. 

The UK is also one of the “victims” of the Dutch exports imperialism, as can be seen on the following picture, which shows the unequal trade balance between ‘exports champion’ The Netherlands and the UK. 

While the €7.3 billion trade surplus is ‘nice’ for The Netherlands, it adds to the huge imbalances within Europe, between the net-exporters Germany, The Netherlands and Ireland and the many other net-importers.

British exports and imports of goods and services per country
Chart created by: Ernst's Economy for You
Data courtesy of: British statistical bureau ONS
Click to enlarge
Great is the effect of a British departure on the whole European economy. The European market would shrink in size by 15% at once and it would lose its most dynamic, large economy. This would diminish the attractiveness of Europe as a target for investments.

My comments: It is good to look at this statement, as it calls the UK the most dynamic economy of the EU.

Although the trade balance of (commercial and financial) services shows indeed a mindboggling surplus of £81 billion, the trade balance of goods for the UK shows a impressive deficit of roughly £65 billion. 

Ergo, the UK earns this €16 billion, due to its extreme focus on financial and commercial services (see the next picture), but would be a large net importer without the London City. The fact that the country is member of the EU will probably reinforce the success of the City and could be a strong reason for the UK not to leave the EU. 

British exports and imports of goods and services
Chart created by: Ernst's Economy for You
Data courtesy of: British statistical bureau ONS
Click to enlarge

Besides that, I don’t particularly like the nature of this ‘dynamic’ economy, as it is too dependent upon financial and commercial services and so much less upon real production of goods and agricultural produce. 

The London City is virtually the financial capital of the world, but it is by far the most important region in the country. When the London City sneezes, the UK has caught a dangerous cold. This makes the British economy very vulnerable for financial and economic setbacks, where a more balanced economy would be less vulnerable to it. 

It also adds to the substantial imbalances within the United Kingdom: at one side there is the blatant exuberance of the London City, where the sky is the limit, and at the other side there is the disgraceful poverty of former industrial regions and mining areas. Read for instance this article in Dutch about this very topic of poverty.

Even more important than the economic effect is the political effect of a British departure. The European decision-making process has a fragile balance between the Northern and Southen European countries. 

The Northern block, with heavyweights Germany and the UK, stands for a smaller government in the economy and society and scores better with respect to competitiveness, corruption, transparency and quality of the public services. 

The Southern block, with the heavyweights France and Italy, but also Spain, is renowned for its urge for protectionism and a bigger government, and unfortunately also more corruption in politics and society.

My comments: Those darn Roman Catholics with their protectionism and their corruption”. 

This protestant MEP Peter van Dalen certainly knows his flock and their weaknesses. For MY taste, however, he could have shorted the stereotyping in his Op-Ed, even though there can be some sense of truth in it.

Besides that, with his claim that all North-European countries and citizens seemingly want a smaller government, he clearly neglects the left-wing people in Germany, The Netherlands and many people in the Scandinavian countries. That is both naive and foolish.

Where the South-European politics is still going through a rough time after six years of crisis, even more turbulent times lay ahead. Protest movements in Greece, Spain, France and Italy increase uncertainty. All these people want less austerity, less reforms and a flexible application of the European rules.

In this political landscape, the UK is necessary as a counterweight and strong partner. When the British leave, Europe could move in a direction from which neither The Netherlands nor the whole EU wil prosper.

My comments: Summarized, Peter van Dalen thinks: “There are two ways to solve the economic crisis: our Northern European way and the wrong one”. That is very arrogant and, as a matter of fact, it seems to be wrong.

Although I can’t prove that the monomanic focus of the EU on austerity, structural reforms, reduction of state debt and diminishing the budget deficits has done much harm within the whole European Union, the evidence of this seems to be mounting.

Export champion The Netherlands is still in a comatose economic state and while the Germans seem to do much better, they still have an enormous group of seriously underpaid workers (i.e. the mini-jobs). Consumption is still at anemic levels everywhere and the retail industry in The Netherlands – and probably many other countries – seems dead before dying.  

As a matter of fact, the whole EU have entered times of deflation and the situation in countries like Greece, Spain, Portugal and Italy is even worse, with real, shocking poverty in Greece and the emergence of a lost generation in Spain, due to 60% youth unemployment.

The German “solutions” for the economic crisis in the South of Europe, which were a reflection of their eternal fear for hyperinflation, have done more damage than good in these countries.

Cameron wants to have the possibility to retrieve competences from Brussels. He also wants to enable that a number of national parliaments could create a blocking minority, in order to stop new European legislation. 

He wants tax reduction for trade and industry and more trade with Asia and North-America. He wants a reform of the free traffic of people, so that Europeans can work everywhere, but only get access to social benefits after a longer period of work. The obligation to create an ever closer union should be abolished.

My comments: The desire to retrieve competences from Brussels, as well as the installation of blocking minorities with respect to European legislation – through national parliaments – could lead to an even bigger administrative monstrosity than the current EU already is. In the end, nobody would know which and whose legislation is applicable at any moment.

Although I’m sympathetic towards lower taxes for trade and industry (however, only for Small and Medium Enterprises (!)), I do fear that the citizens of the European union would have to foot the bill for this void in the tax receipts.

Besides that, as a consequence of the erratic and antisocial tax rulings in countries like Ireland, Luxembourg and The Netherlands, there are already many multinationals that hardly pay any taxes at all. Everybody heard the examples of Starbucks, Amazon, Apple, Google, Microsoft, Shell and probably many, many other companies. 

So why would you want to hand out even higher tax reductions to such companies? To the contrary, a pan-European harmonization of tax legislation and tax rulings would stop 'these herds of corporate locusts' from looting the pan-European funds, by not paying for the social services and infrastructure that they use on a daily basis. 

Alas, such a harmonization would mean more Europe instead of less...

Shutting out foreign workers from social security for a few years, like David Cameron wants, is akin to him wanting to have the benefits of foreign workers, but not the burdens. Where I really hate fraud with and embezzlement of social security money, I don’t think that creating a generation of foreign-workers-without-social-security-rights is the right solution for this problem.

And with respect to the ever closer union: we all took a democratic decision to deploy the Euro in 1999/2002 and we all tasted the benefits of this decision – unless you again would like to travel with four different currencies in your wallet and an envelope full of holiday cash and traveler's cheques.

Yet, we deployed the Euro with a foundation, that is akin to the wooden house of the three piglets fairytale. A strong burst of economic headwinds was enough to tear the whole structure down.

In other words: we need this so-called ‘ever closer union’ to reinforce the structure of the Euro, with a solid foundation that can stand the test of time. So, please don’t whine about the ever-closer union, please!

Conclusion: As far as I’m concerned, the British can stay in the European Union as long as they want. But please, let them stop with trying to turn the EU into a free trade zone ‘on steroids’, by totally ignoring the political and historical component of the European Union. And please let them stop with advocating a British policy that only wants the benefits and not the burdens from the European Union. But if they want to leave after all, so be it! 

And with respect to Peter van Dalen, I would like to state: 

You are a religious conservative and there are many liberals and conservatives who think exactly the way you do. Still, as a social-democrat, don’t want to be part of your stereotypes about Northern Europeans, who all would like to have a smaller government in economy and society. And with me probably many other people too.

Friday, 23 January 2015

Should we aid the owner-occupied housing market in The Netherlands, by making renting almost impossibly dear for starters and movers on the (social) rental market?! According to the building cooperatives and the Dutch government, the answer is an unambiguous “Yes”!

There is a war going on in The Netherlands; a silent war in which no shot is fired, but of which the outcome is definitely very intrusive for hundreds of thousands of people in this country. 

It is called “The war against (social) rental housing”.

This war is fought between the tenants of (social) rental houses – especially starters and movers, looking for a new rental house – at one side and the government, commercial landlords and the building cooperatives at the other side.

Already about one year ago, I discovered that the price increases on the market for (social) rental housing during the last 25 years had been outrageous, when compared to the official inflation rate:

Development of the average house rents in comparison
with the official inflation rates, during the last 25 years
Data courtesy of
Click to enlarge
Although the price development of rental houses differs per city and location, the average price development for rental houses has exceeded the official, annual inflation rate no less than 17 times, during the last 23 years!

Since the eighties and nineties, the subsequent Dutch cabinets have been on ‘war’ with the tenants of social rental housing and free sector rental houses, by allowing rent increases to be well above the inflation rates in most of the cases.

While these price-increases were supposed to be in synch with the vast price increases in the owner-occupied housing market, it led to rental houses that were generally much too expensive.

These excess prices for rental houses led to stagnation in the Dutch rental market, especially as some price increases would only be deployed upon the next inhabitant of a rental house and not on the current inhabitant. This meant in practice: staying in your current rental house is cheap, while moving to a new rental house is expensive.

The year 2014 was definitely not a trendbreaker, with respect to this alarming development. The rents for free sector rental houses and especially social housing exploded for starters and movers, with rent increases amounting to as much as 22.6%. These rent increases made it virtually impossible for many low-income starters and movers to acquire even the simplest (social) rental house.

The Dutch housing association “Woonbond” rang the alarm bell today:

Tenants and starters on the rental housing market have a very hard time financially, due to the enormous rent increases, during the last two years. This was disclosed in an analysis from the Dutch Woonbond.

In 2014, the rents for vacant rental houses increased in average by 22.6%. For existing tenants, the rents increased by an average of 4.6% per year, during the last two years.

Increasing numbers of tenants have gotten into financial trouble, as this was the third year in a row that rents were allowed to increase by percentages far above the inflation rate.

Building cooperatives increased the rents with even higher numbers than commercial landlords. In 2014, the rents in the social sector rose by 4.7% among building cooperatives, against 3.8% among commercial landlords. 

In 2013, the reserves-available-for-housing-investments increased to €45.3 bln from €12.8 bln in 2012, especially due to a strong increase of rent cash flows. In spite of the ‘landlord levy’, a special tax to top off the profits of building cooperatives, the financial outlook of the building cooperatives improved dramatically. So there is enough leeway to not dramatically increase the rents in 2015.

The average price increase for a vacant rental house of 22.6% causes that the rent for such a house easily increases by €100 - €200 per month, in case of a tenant change. As a consequence, the amount of affordable rental houses is under fierce pressure and the new tenants get confronted with rents that have become skyhigh.

More and more tenants have a hard time to afford these excessive rents. This development is emphasized by the increasing numbers of house evictions, caused by defaulting tenants. With almost 7000 evictions, the number in 2013 was 8% higher, year-on-year.

The current situation in the Dutch housing market is extremely perverse: 
  • People with lower incomes, who are very dependent upon affordable (social) housing, have been confronted with these outrageous rent increases from the building cooperatives and - to a lesser degree - the commercial landlords: especially when they are starters or movers on the rental market; 
  • People with higher incomes, who can easily afford owner-occupied houses on the other hand, have been enjoying the lowest mortgage interest rates “in history”. On top of that, they received all kinds of other facilities and endorsements from the Dutch government lately. And these interest rates are even cut in half, due to the Mortgage Interest Deductability. 

The whole situation on the rental market is a mess. And I would even call the behaviour of the Dutch government, with respect to (social) rental houses and especially the recent rent increases, criminal negligence:
  • First, the building cooperatives have been charged with litterally billions in ‘landlord levies’. The building cooperatives, on their behalf, charged these levies to their tenants, without further hesitation;
  • Second, the building cooperatives could also charge the costs of their commercial catastrophes, as well as the financial debris of their derivative investments-going-berserk to their tenants, during the last few years, using the ‘heads, we win! Tails, you lose!”-scheme;
  • With The Netherlands (close to) being in a deflationary period and with the mortgage interest rates at all-time lows, it is totally outrageous that commercial landlords, as well as the building cooperatives – with their special responsibility for social housing – could raise the rents with dozens of percent points, during the last few years.
  • The Dutch Ministry of Housing, Spatial Planning and the Environment has blatantly neglected it supervisional role with respect to the building cooperatives. This enabled these semi-governmental bodies to operate like private kingdoms, of which the ‘kings’ had Euro-signs in their eyes and did not see any hazards of their actions at all.

    gruesome story of Vestia, as written in the excellent book of ‘Financieel Dagblad’-journalist Hans Verbraeken, described perfectly how terribly things could co wrong when executives of building cooperatives had too much power, influence, self-confidence and pizazz, to listen to their critics. 

Still, one way or the other, the tenants are confronted with the consequences of all of this and must pay a dear price for it.

Wednesday, 21 January 2015

Is the Euro indeed ‘dead in the water’, as some pundits claim? Or is an escape from the current political maze again possible for the European Union and the Euro-zone?!

I only want to make these things last,
So how could this have gone so fast?
And now you're leaving...

The decision within the European Union to deploy the Euro in 1999 – as deposit money – and in 2002 – as the official single currency– has been a controversial one, in the eyes of many people and some pundits of high repute.

One of the most-heard objections from the adversaries against this pan-European currency (unfortunately often in hindsight), was the political and financial quicksand on which it was built.

There was no political union within the EU, with a stable administration that stood above all individual countries and had sufficient executive power, with respect to the political and financial management of the Eurozone. And there was neither a monetary union, with rock-solid, automated rules and controls in place, in order to maintain the financial stability of the currency union.
There was not even a banking union, as a minimum warrant for the required stability.

The only unified control instrument, with respect to the Euro, was the European Central Bank, which – in combination with the central banks of the individual Euro-zone member states – issued the banknotes and controlled the money supply in the whole Euro-zone and thus maintained the stability of the currency. In the first years of its existence, this seemed to work fine for the Euro anyway.

After a cautious start in 2002, with a value of €1 per $0.89, the value of the Euro increased over the years and hovered between €1 per $1.20 (November 2005) and $1.60 (July, 2008). The Euro seemed a rock-solid example of European cooperation and many companies and people were enjoying the big advantages of this unified currency for trade, business, distribution and tourism purposes.

The development of the Euro vs USD
exchange rate during the last ten years
Chart courtesy of:
Click to enlarge
The positive vibe about the Euro started to change when the credit crisis gained momentum in Europe. Between July and November 2008, the Euro made a sharp downfall to roughly $1.22, although it quickly recovered when the credit crisis seemed reasonably under control in Europe, after just a few containable local crises.

However, from 2010 on, the financial crisis (then called: Euro-crisis) in Europe really came on everybody’s retina, when Greece was exposed as a genuine European problem child, with enormous budget problems and a state debt that seemed hardly maintainable for the future. 

Other peripheral countries, like Portugal, Italy, Ireland and Spain all had their own issues, with either huge budget deficits, soaring unemployment, enormous financial setbacks, due to strong economic headwinds or a state (national) debt that could hardly be contained: the PIIGS were born as a moniker for everything that was wrong about Europe and the Euro.
A few countries within these PIIGS-countries ran even a considerable risk of defaulting, if nothing dramatically would happen. At the same time the European governance model suddenly seemed extremely viscous, indecisive and overly bureaucratic.  

The official regulations that were in place within the EU, like for instance the Stability and Growth Pact (SGP), often had a quite arbitrary foundation.
This meant that boundaries and thresholds – for the SGP this were the 3% budget deficit and the state debt < 60% of Gross Domestic Product – were rather the result of a political negotiating and decision-making process than of sound scientific / economic foundations.
Besides that, while the Euro regulations were initially persevered quite strictly for the small euro-zone countries, the large countries Germany and France used a fair amount of jawboning in order to avoid heavy penalties for repeatedly breaking the rules of the SGP. 
And to make things worse; while the currency itself was a common currency for almost the whole union, political and most financial decision-making lay in the hands of the individual countries of the EU (i.e. through the European Council as highest decision-making board), opening the floodgates for endless quarreling and severe conflicts, as well as a virtual monopoly for Germany and France, with respect to decision-making about the Euro. 

The peripheral Euro-countries were begging for help and a certain amount of economic ‘looseness’, regarding the exceptional circumstances of this huge financial/economic crisis, while the stronger North-European countries (read: Germany, Finland and The Netherlands) banged the drum in favour of a strict application of the Euro-zone rules and measures.  

These financially sound countries dragged their feet and were extremely reluctant to financially aid the peripheral countries with solving their ‘own, self-created financial mess’, even though they had played a substantial role in creating this mess in the first place. 

On top of that, the United Kingdom acted as a massive ‘jamming station’, with respect to the decision-making process within the European Union.
The UK showed a hardly disguised and steadily growing Euro-sceptism and straight-forward hostility against the European Union as a communal institute. By doing so, the country ‘blackmailed’ the other European countries , in order to get special treatments and financial rulings for the London City, as economic motor of the country: “If the European Council cannot give us what we want, we might be forced to leave the European Union…” 

At that time, it seemed that envy, selfishness and perhaps even anger and gloating ruled within the European Union. Every small step ahead seemed the result of endless quarreling between the EU member states and was seemingly based upon half-baked compromises, that were only there ‘for the stage’. Everybody was busy with his own business, instead of looking at the mutual interests of the Eurozone as a whole.  

In other words, the Euro seemed to be exposed as emperor-without-clothes, while the European Union acted like a bunch of frogs in a wheelbarrow: all jumping in different directions. In spite of this all, the European Union managed anyway to contain the Greek crises and the problems with the other PIIGS-countries, albeit by a whisker.  

The first (Greek) crisis, starting in 2010, could be contained with some political and financial wizardry from all European parties involved, while the second, much broader crisis in 2012 could eventually be contained with the famous words of rookie ECB-president Mario Draghi, that “within his power, he would do whatever it took to rescue the Euro”. That was sufficient for a while… 

All negatively biased Anglo-Saxon pundits and Euro-permabears had to shut up for a few years and the financial markets somehow refound their confidence in the Euro and the Euro-zone. At least, until now… 

After the famous words of Draghi, the government leaders in the European Council shared a misplaced feeling that their job was done, with respect to rescuing the Euro, and that they could return to business-as-usual.
This meant in practice that the necessary reinforcement of the shaky foundation under the Euro – the creation of a banking union, a monetary union and eventually a political union, – became less prioritized again.  
This counter-intuitive  development for the Euro was mainly the consequence of the ubiquitous emergence of right-wing and left-wing, populist parties in Europe. Parties, which were all in favour of less Europe, less Schengen, less immigrants, less EU interference with national politics, less Euro-zone and last-but-not-least less Euro:
  • Front National (France);
  • UKIP (UK);
  • Alternative für Deutschland (Germany);
  • PVV (The Netherlands);
  • Vlaams Belang (Belgium);
  • True Finns (Finland);
  • Lega Nord and Five Star-movement (Italy);
  • Golden Dawn and Syriza (Greece)
and dozens more birds of the same feather.

The Euro and a further unification of the European Union were the main scapegoats of these populist parties, as they were presented as “technocrat inventions of corpocratia”, which were deployed without a proper consulting of the European population.
These populist parties made a possible Greek exit from the Euro-zone look like a walk-in-the-park and a politically inevitable fact, instead of a difficult and highly dangerous process with an uncertain outcome, that should – if ever – be executed very cautiously.  

And now, with the political and financial situation in Greece seemingly more unstable than ever – only days before the elections, in which the left-wing, populist ‘Syriza’ party seems a dead-cert winner – and with Italy as a second financial bungler, the future of the Euro and the Euro-zone is back on everybody’s retina. And so are the Euro-permabears and negatively biased Anglo-Saxon pundits.  

Again, the sheer future of the Euro seems on the line.

One of the best articles to this respect, was an Op-Ed in the Huffington Post, written by Joseph Zammit-Lucia, executive director of the Center for Development Economics. Very subtle, he called the Euro “the most socially destructive political act since WWII”.  

Here are the pertinent snips of his article:

[…], the pessimists will focus on the ongoing and seemingly intractable stagnation in the Eurozone and the looming of another potential Euro crisis as Greece heads towards another election with uncertain results.

There now seems little doubt that the introduction of the Euro in its current, half-baked form has been the most socially destructive European policy decision since World War II. The introduction of the Euro has led to the following chain of events: an initial period of inflation as traders took advantage of prices being changed to the new currency; a fake "wealth bubble" during a period of seeming prosperity driven by loose (some would argue irresponsible) credit in countries for which the adoption of the Euro provided artificially low interest rates; the inevitable crash which has caused untold social destruction in many countries; a German-driven obsession with austerity which has gone way beyond its usefulness and has left Greece and others buried under a mountain of unpayable debt, and the Eurozone languishing in stagnation and probable deflation. It is no wonder that Matteo Salvini, Italy's second most popular politician, calls the Euro a "criminal currency."

The economic dangers associated with the introduction of the Euro were predictable - and indeed predicted by many. Yet political leaders at the time chose to make a grand and hubristic political statement irrespective of the devastation it could bring to their citizens. The Euro is, maybe, the best example of the consequences of a political and policy elite living in their own world and totally divorced from the consequences of their actions on ordinary people.

The logical response is the "orderly" dismantling, or at least shrinkage, of the Euro.." Yet European leaders have decided that their efforts should be directed at saving the Euro - whatever it takes - to use Mr Draghi's most famous utterance. Even, it seems, if what it takes is social devastation across the Eurozone and the ruin of millions of people's lives.

As we enter 2015, Europe finds itself between the devil and the deep blue sea. On one side is the Euro - the devil that we are wedded to, that will continue to keep the Eurozone economy in stagnation, and that will continue to limit the flexibility that individual countries need if they are to re-build their economies. On the other side lies the unknown - meaningful reform of the Euro and the European Union as a whole.

This was definitely a must-read article and I agree with most statements that Joe Zammit made with respect to the Euro, as Murphy’s Law seems too much involved in the creation and maturing of the Euro: everything that could go wrong, did indeed go wrong and much more will go wrong in the future too.

Still, I am not so pessimistic about the Euro as Joe Zammit.

I have an unfounded, but strong believe in the strenght of the European Union and the Euro-zone, that everything will more or less turn out fine, in the end.
Europe seldomly takes all the necessary actions at exactly the right time, but it has a reputation for always ‘stumbling into the right direction eventually’.

In the end, political conscience and street-smartness mostly prevent the members of the European Council from making irrevocable blunders and escalating the political situation in the EU.

The European citizens on their behalf, in the end often rather choose for the ‘two steps forward, one step back’ approach of the moderate political parties, than the gung ho, kamikaze approach of the populists. During the last 75 years, Europe has been the continent of the slow steps forward, instead of the giant leaps.

The European Union and the Euro-zone are often agonizingly slow in their decision-making process and on various situations the political process seems dead in the water, but somehow they always survive.

Let’s hope it that it happens again, with "all hands on board" of the Euro ship, but be prepared for a very long political process and a substantial period of stagnation, high unemployment and very moderate growth.
Almost everything goes, but nothing goes easy in Europe!