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Is the Euro Doomed? Greece is but a Harbinger of Much Worse to Come

May 6th, 2010 Comments off

With the markets giving the proverbial “thumbs down” to the deficit-financed Eurozone/IMF bailout of insolvent Greece, the value of the once might euro in relation to a basket of key currencies is sinking at warp speed. It is quite clear that the Eurozone bailout is a panicked-induced  attempt to save the euro from its own contradictions. However, it is a futile attempt that is doomed to failure, in my view.

A monetary union  involving 16 vastly different economies with asymmetrical fiscal policies is nonsensical in the extreme. A common currency may have made sense for a limited number of major European economies, however the current matrix is unsustainable, despite the willingness of European politicians to bankrupt their citizens in a fool’s errand attempt to save what is doomed.

Greece is now convulsed in social unrest, an entirely predictable outcome that is bound to get more serious as the full severity of the IMF and Eurozone austerity measures take full affect on the Greek workers and taxpayers. Supposedly this is all being done to prevent a contagion from infecting other European economies with high deficit to GDP ratios. The painful reality is that the pandemic is already beyond the borders of Greece. It will ultimately savage every nation-state existing in a neo-Keynesian fantasy of  infinitely-expanding sovereign debt. This includes not only the Eurozone, but also the UK, Japan and ultimately the United States.

Greece is a window into the next phase of the global economic crisis. The euro may very well be an early casualty of what is unfolding into the deepest systemic crisis of modern capitalism since the Great Depression of the 1930s.