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Kai Ryssdal: Commodities did a little better today than they were doing at the end of last week. Oil nudged up a bit, back to almost $72 a barrel. The euro edged higher against the dollar. Europe’s single currency took a shellacking last week on the foreign exchange markets amid worries about budget deficits over there. There was some tough talk on that topic over the weekend at a big finance meeting in Canada. And it does seem to have calmed currency traders just a bit.
But as Marketplace’s Stephen Beard reports from the European Desk in London, markets usually like action, not so much words.
STEPHEN BEARD: European finance ministers assured the G7 meeting that Europe would deal with its deficits. But there was no concrete plan of action. Currency dealers continue to fret over the debt of eurozone countries like Greece. They fear that Athens might actually default.
And that fear is undermining the single currency, says Graham Mather of the European Policy Forum.
GRAHAM MATHER: The danger for the euro itself is that the market anxieties about the Greek public accounts could make people lose confidence in bonds, other things denominated in euros.
Few observers believe that the Greeks will be able to sort out their public finances on their own. Too much austerity is likely to provoke severe unrest.
Daniel Hannan is a member of the European Parliament, and he says there’s only one serious solution.
DANIEL HANNAN: The only way for the euro to hold together is if there is effectively a bailout of the Greek economy by essentially German taxpayers.
But when Germany adopted the euro 10 years ago, German taxpayers were promised they would never have to bailout the weaker economies to the south. Some long-term critics of the single currency, like Professor Tim Congdon, say this could be the beginning of the end of a project that was always doomed to failure.
TIM CONGDON: It’s never really been done before. Usually you have one country, one government, one central bank, one currency. Instead we’ve got one currency and 16 governments. I’ve been amazed it continued this long.
Most analysts say the euro will survive. Its collapse would cause turmoil in Europe, which Germany would be determined to avoid. The stakes are high. The choices are hard. Over the next few weeks, the euro faces the fight of its life.
In London, this is Stephen Beard.
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