Save a single currency: what are the chances of euro

The longer the story with Greek duty lasts, the more boring it becomes. Formally, the main goal of negotiations is to solve the problem of Greek debt by providing financial support in the form of additional loans and writing off part of the existing debt. This will allow 2020 to reduce the ratio of debt to GDP from 160% to 120% - in this case, the debt load of Greece will be comparable with the current Italian. The intention to reduce the debt load of Greece to the same level as that of other problematic countries, in itself, is very surprising and quite absurd. Moreover, no one can guarantee that this goal will be achieved. It turns out that it is only about gaining time and “protect” the rest of the Eurozone from Greece.

Hardly anyone can be sure that, while remaining within the Eurozone, the Greek economy will be able to show positive dynamics in a year or two and achieve sustainable growth, which would allow us to serve a market-based debt in the future. It is extremely difficult to ensure further GDP growth in the prescribed budget savings if structural reforms, privatization and creation of new jobs do not begin.

In recent years, the total revenues of Greece budget have been at about 40% of GDP, but the expenses amounted to about 50% of GDP. It is not clear how the country will be able to receive more income and reduce the deficit, and how it can moderate budget expenses if the economic decline is deeper and longer, not to mention the side effects of future social problems. This means that Greece, theoretically, again, additional support and a new debt of debts will be required, but at a certain moment it simply will not be able to get them.

Regardless of whether Greece will remain in the eurozone or come out of it and return to Drahma (after the legal mechanism for countries who want to leave the euro zone was developed), she will have to declare a default to create conditions for economic growth. Writing off 70% of the debt will not be enough. The write -off, let's say 90% of the debt, probably would help restore the growth of the economy, but it is almost equivalent to default. Apparently, the best prerequisites for the resumption of growth will be a return to drachma (which can temporarily be two to three times cheaper than the euro) and default. Reducing government departments, salaries and pensions by 10%, by 20% and, in general, as much as you like, will not lead to a significant increase in the economic competitiveness of Greece.

In the end, Greece itself is not so important: it is primarily about the existence of the euro as a currency. Negotiations on the fate of Greece are more like attempts to endlessly postpone the problem. Ideally, of course, I would like to avoid spontaneous default in March. It is fundamentally important to prevent the “infection” of other countries, supporting the debt markets of Italy and Spain by interventions by the ECB and lending to banks so that the entire financial system continues to function and it is possible to carry out the necessary changes, such as gradual “cleaning” of balance sheets. All these measures are aimed at saving the euro.

The existence of the euro was crucial for the global economy and the financial system, since this currency provides healthy competition for the dollar. The only reserve currency is the same negative factor as the lack of economic or political competition in some countries, especially if the reserve currency is produced by a country that has a huge budget deficit and the ratio of debt to GDP is growing. The euro is very important not only for Europe, but also for world powers, such as China and Russia, which hold part of the gold and foreign exchange reserves in the euro, and they seek to maintain their diversification. It can be expected that at least these two countries will support the euro (however, quite limited), since neither Russia, China, nor other countries can offer an alternative reserve currency, not possessing a fairly large -scale economy and financial markets.

Macroeconomic statistics for the IV quarter of 2011 in the main countries of the eurozone: Germany and France - was somewhat better than expected. This means that Germany probably managed to avoid a technical recession, and in France the growth of the economy and the tax base can also accelerate in 2012. Apparently, this year a European rating agency will be created-a sign that the system continues to develop. In the future, there is another tour of the debate about the future monetary and budget structure of the Union.

In general, the Eurozone, apparently, has a chance to survive (possibly reincarnated) when establishing new regulation rules. At the same time, for other countries, not the internal problems of the Eurozone is more important, but the very existence of the euro as a currency balancing the dollar. When the situation is normalized and Europe will carry out all changes, the euro can even strengthen its position.