In which Europeans test our patience

Will the Euro fantasy-currency please hurry up and splinter into smithereens? Like many defensive-minded folk, I am sitting on a lot more cash than I usually would, reckoning that Europe’s sadistic monetary arrangement has to unravel at some point. There will be contagion, panic, chaos, plunging markets and Hong Kong Financial Secretary John Tsang telling us we are doomed. And some sort of assets somewhere – I wonder which? – will be absurdly mispriced for a time, presenting the strong-stomached among us with an exceptional buying opportunity.

The data from Athens bring tears to the eyes, or at least make you think ‘yikes…

Greece’s economy shrank 3.5 percent in 2010 and 6.9 percent in 2011 and is expected to contract 7 percent this year, a decline reminiscent of the Great Depression of the 1930s. Unemployment is at 22.5 percent and expected to rise to 30 percent, while Greece’s main retailers’ association warned on Monday that sales were expected to drop 53 percent this year.

They are being told to take more of this. By comparison, Hong Kong’s only year of negative real growth in the deflationary 1998-2003 period was 1998 (-5.5%), and unemployment peaked at 7.9% in 2003. Still, Greece is just a sideshow; the real nightmare is Spain, and the more excitable commentators foresee Italy and France as dominos lined up behind it. The only ways to avoid some sort of break-up appear unthinkable (for example, the German people volunteer to donate their hard-earned retirement savings to foreigners). That said, I can’t avoid having a sneaking suspicion that European policymakers will, against all the odds, find some way of avoiding the inevitable through yet more summits, mini-bailouts and growth-and-happiness pacts with all the vacuous pomposity the continent’s bureaucrats have refined over decades of constructing their sacred project.

Such perpetual postponement of an ending would befit the limitlessness of man’s capacity for self-delusion. European Central Bank boss Mario Draghi proclaims that the euro is ‘absolutely not in danger’, is ‘irrevocable’, and that ‘imagining an explosion of the euro area underestimates the political capital that our leaders have invested in this union, as well as the support of European citizens’.

Mercifully we still have markets to enforce reality. Bond investors will eat ‘political capital’ for breakfast. And they provide writers with the chance to indulge in some vivid imagery

…imagine an operating theater inside a betting shop. As surgeons prepare to amputate a gangrened foot to prevent infection spreading to healthier parts of the body, gamblers on the sidelines lay bets on which limb will be next for the chop.

Anyway, get on with it – it’s tiresome, and the cartoonists are running out of clichés.

Click to hear the Kinks’ ‘Tired of Waiting’!

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14 Responses to In which Europeans test our patience

  1. No soup for you !! says:

    Suppose the EURO breaks up: who wins ?

  2. Real Tax Payer says:

    I think the message is finally getting through to the Geeks , sorry Greeks that they have been living beyond their means….

    See the HK Standard page 4 for a really worrying sign of financial distress :

    “Greece’s largest maximum security prison won’t get to keep its waterfall- adorned, BBQ- equipped swimming pool”

  3. Obersturmgruppenfuehrer Bela stirs and says:

    Today Greece and Spain. Tomorrow ze World!!!

    Totale Vernichtung! Restlos ausradiert!

    Ze final solution to Capitalism.

  4. PCC says:

    I read a persuasive article that proposed that the best solution to the Euro crisis is for Germany to leave the Euro and re-introduce the deutsche mark.

  5. Vile says:

    Possibly the best solution to the alleged Euro crisis, but certainly not the best solution to intra-European military conflict.

  6. Gazza says:

    You might see DR STRANGELOVE to appreciate the argument that a new race and a new world can arise on the ashes of world destruction. Warum nicht, as the Germans say.

  7. Stephen says:

    @No Soup For You

    In the short term no one. Except, as the author states, those with strong stomachs willing to take a punt on lower asset prices – we could have a SARS like correction on local property prices ?

    In the longer term – Europe. They were sold this dud and no amount of patching is now going to make it work. Time to fire the Brussels Bureaucrats and get back to individual European nations running their own budgets.

    Mind you those Bureaucrats would effortlessly fit into HK’s (careful of their morale) Civil Service – I see a number of similiarities.

  8. Mr Panos says:

    You all fell into our plot!

  9. Real Tax Payer says:

    I suppose Germany could just invade Greece, and Spain, and Italy and then France….

    ( Glad that the UK never joined the EURO !)

  10. Tiu Fu Fong says:

    It’s the revenge of the Melians.

  11. No soup for you !! says:

    Yeah, let’s go back to the good old days of a major war every 25 years.

  12. Chimp says:

    Bit more than every 25 years. What have we had now… Seven Years War, Napoleonic Wars, WW1 and WW2. Nearly a hundred year gap in the middle. Still trying to find a war the Krauts managed to fucking win…

  13. Tiu Fu Fong says:

    Krauts (at least the pointy helmed Prussians) won against the French some time in the 1860s and left the French with a desperate urge for revanche. Also left them with a big cleaning bill from the Paris commune, but that was self inflicted.

  14. Chimp says:

    Yes, but it wasn’t really much of a war, was it. Two countries that no one likes very much beating the shit out of each other… hard to even call that a war. More like entertainment for the rest of us, really.

    All those micro wars don’t really count. “Major war” means that every man and his fucking dog is involved.

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