Categories: EuropeFinance

To Converge or Not To Converge – the Greek Tragedy Continues

Athens, Greece

It seems a long time ago, but when the Euro was introduced, one of the cornerstones for membership and for the long term success of the Euro was convergence of economies within the zone. Convergence does not seem to be on politicians’ lips at the moment but what we are seeing happening across the Eurozone is as much a result of divergent economies as anything else.

Some countries under the cloak of the Euro borrowed way beyond their means, creating a false convergence of kinds in government coffers. The bond markets lent and the countries spent. Now the Eurozone finds itself in a difficult position, devaluation of individual currencies has been replaced by austerity and bailouts at the same time as the cost of the historic borrowing rises, dragging more and more money out of an already stressed economy.

So where does it end? We are in largely uncharted water at the moment – the Greeks have voted for more of the same “medicine” and to try and stay in the Euro. But this is an untested treatment and if one was to use a pharmaceutical analogy there is no certainty the treatment would get past the drug regulators as safe for human trials.

The situation is serious and the infection is spreading, if it was a medical decision to save a life maybe if would be safer to opt for a treatment that had been shown to work. But the Greeks seem to have chosen the new treatment – let’s hope they are right.

CFI

Recent Posts

Russian Gas Transit to Europe Discontinued Following Lapse of Ukrainian Agreement

Ukraine has terminated a longstanding transit arrangement that, even amid an active conflict with Moscow…

4 days ago

Banks and Work-Life Balance: A Step in the Right Direction

How BNY Mellon’s Recharge Period Sets a New Benchmark for Employee Well-Being The finance industry…

7 days ago

AI Governance in Financial Services: A Board-Level Imperative

Artificial intelligence (AI) is rapidly transforming the financial services industry, offering unprecedented opportunities to streamline…

3 weeks ago

AI in Financial Services: Preparing for the Next Two Years

Artificial intelligence (AI) is rapidly transforming the financial services industry. According to McKinsey & Company,…

3 weeks ago

The Exponential Growth of AI Computing Power: Trends and Predictions for the Next Five Years

The field of artificial intelligence (AI) has experienced remarkable growth in recent years, driven by…

3 weeks ago

The Economics of Christmas

Unwrapping the Global Trends in Online and High Street Shopping During the Festive Season The…

3 weeks ago