What is happening in Greece today is one of those periodic crises that the European Union's founding father, Jean Monnet, predicted would happen.
It's his most famous aphorism. "People only accept change when they are faced with necessity, and only recognize necessity when a crisis is upon them."
In other words, Greece offers an opportunity for Europe to make its union more perfect, by marrying economic union within the Eurozone to its existing political union. The fact that the Greek finance minister resigned following the country's "no" vote requested by his ally, the Greek prime minister, is proof that the eurozone remains strong, and that those selling Euros in the face of it are making a big mistake.
The question now is what economic policy the new super-state, composed of the 16 (or 17, if Greece remains) countries in the Eurozone will have. Because Prime Minister Tsipras has a point. Unrelenting austerity is a bad policy. But, within the zone, that policy has already been abandoned, thanks to the "quanitative easing" of the European Central Bank that began in January.
As in the U.S., where political austerity became wedded to economic Keynesianism, with repeated injections of cash into banks by the Federal Reserve done against the backdrop of deficit reduction by the Congress after 2010, pushing more money into the system is not being accompanied by a wholesale rout of the currency. Since March, the trend of the Euro against the U.S. Dollar, the other major "reserve" currency, has been upward, from a low of $1.05 to around $1.10.
What the European authorities will not allow, and what Greece most wants, is for local political authorities to over-spend European currency. Europe wants local deficits kept within bounds. It wants nations, and their governments, to treat themselves like states. The Greek vote was a political temper tantrum led by Prime Minister Tsipras, aimed at maintaining his Syriza Party in power, and not (as European leaders claimed) a call by the Greek people to exit the Euro. It was a negotiating ploy.
A Grexit could still happen. But even if it does, the rest of the currency union has been ring-fenced. Portugal 10-year bonds are still paying just 3.05%, those of Spain 2.36%, those of Italy under 2.35%. The "contagion" that was feared from a potential Greek exit is not happening, because the lesson of Greece's current economic pain is being learned by local political leaders.
The crisis will continue to roll on. Greece may still leave the Euro, although I personally doubt it. Even the United Kingdom, or at least England, may seek to leave the European Union, although since it's not in the Euro zone that hardly matters economically. Those countries within the Eurozone will have a unified economic policy, with fiscal restraint and liberal banking, and it's that more perfect union that Monnet was seeking in the first place.
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