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The Telegraph – The euro is “irreversible” and not in danger, says Draghi
The euro is “irreversible” and the beleaguered currency union is not in danger of collapsing, according to European Central Bank President Mario Draghi, who also argued that eurozone nations will eventually be bound even closer together. The central bank chief suggested that analysts who have been tracking the mounting sovereign debt crisis in Europe have been too pessimistic in forecasting worst-case scenarios for the currency and had not recognised the political will behind the eurozone. He was bullish on the future of the currency despite the escalating crisis in Spain, where stocks on Friday experienced their biggest one-day drop in two years, dragging other European markets down with them. The yields, or interest rates, on benchmark 10-year Spanish government bonds have also climbed even further beyond the 7pc threshold, which many market-watchers view as unsustainable. Mr Draghi claimed that the currency was “absolutely not” in danger when asked by France’s Le Monde newspaper in an interview. “We see analysts imagining the scenario of a euro zone blow-up,” he said. “They don’t recognise the political capital that our leaders have invested in this union and Europeans’ support. The euro is irreversible.”

Source: Bianco Research

Category: Currency, Think Tank

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5 Responses to “The Amazing Irreversible Euro”

  1. Tutti says:

    “You keep using that word. I do not think it means what you think it means.” — Inigo Montoya

  2. Francois says:

    There are 3 irreversible elements in this Universe: death, taxes and bullshit.

    Mr. Draghi is swimming in the 3rd element.

  3. VennData says:

    Taxes are not irreversable if you have Romney’s accountants.

  4. endorendil says:

    Take him at his word. The euro is here to stay for all the core countries. Greece might not stay and if it should leave (they’re not known for making smart economic decisions) it will be looking to join again (at a different exchange rate) in a decade or so, but at the core the issues are actually trivial: you do not want to determine international competitiveness by changing exchange rates, you want countries (at least at the small sizes of those in Europe) to find their niches and work them.
    On a more general note, you’ll find that the euro is still stronger than the dollar when they started out – despite the internet bubble lifting the dollar at that time. Moreover, I still believe that the weakness of the euro is artificial: the eurozone is no worse off than the US in policitical decisions on economical matters, and fiscally it’s just not even close. The politicians figured out a way to talk down the euro by more than 20% against the dollar and the yuan – not bad for dithering, is it? Sure there is room for more federalization is Europe, and it seems even likely that that may help the real economy. On the other hand, is there room for de-federalization in the US? Or rather, are US citizens willing to start feel more like Texans, Alaskans, Kansans and Californians than as Americans? Is anyone saying that this wouldn’t be beneficial to the stronger states? It’s not like being part of the US isn’t costing some states a huge amount of money. So aren’t we looking at upside for the euro, and nothing but downside for the dollar?
    There just isn’t a long-term negative to Europe from having the euro. The adjustments internally are wrenching – as they are in the US – and there is a structural problem with some regions – as there is in the US. But the economics – and politics – are clear for the vast majority of Europeans – much more than they are in the US. The benefits of being the largest trading block in the world are undisputed.
    In fact, here is something that Americans would do well to remember: the EU is the largest trading partner of China. And it is an essentially balanced trade account. A more competitive Europe … well, the US should damn well fear it.