With the sort of second-perfect timing that would be deemed unbelievable in a movie, Europe declares its crisis over, only to see it flare up again...

When it comes to deeply unpopular European politicians, there is a lot of competition. Leading the field is the hapless Hollande, President of France whose descent into the abyss of popular contempt is unprecedented. Most recently in his many efforts to keep the story away from his own fetid incompetence, he declared the eurozone crisis was over.

Unfortunately, like all good movies, just as soon as we hear that the ‘baddy’ has been vanquished, we know the third reel looms and the crisis will revert for a big final showdown.

Whether this is the denouement of the eurocrisis is difficult to tell, but certainly it hasn’t gone away. This was quickly evidenced by the Portuguese government being held together with duct tape soon after the French President uttered the words of Officer Barbrady in South Park and told the world there was “nothing to see here” and encouraged them to “move along.”

Europe is in a mess because the political class are economically illiterate, fundamentally misunderstand crises and scared of reform. The creeping role of the European state (nationally and supra-nationally) as being the protector of everything in the post WW2 era has only made things worse. Having for years attempted to cover up festering sores with words of encouragement and hope, the ‘hopey changey’ thing has worn out in Europe. If you’re one of the 50 plus percent of young unemployed in Spain or Greece, you tend to see the situation as being somewhat starker than the man who sits in the magnificence of the Elysee palace anticipating the rest of Europe really are eating cake.

Without going through all the EU nations, it is tough to see what could have provoked the outbreak of optimism from President Hollande, other than desperation. His own nation is back in recession and its finances look ugly. Indeed, whisper it softly, Hollande is engaging in budget cuts now as the message finally reached the socialist cabinet that even if you confiscate all the wealth of the rich, the vast French bureaucracy would only sputter on for a matter of months. 

French President Francois Hollande (AFP Photo/Philippe Wojazer)

True, France still looks healthy on a comparative basis but that’s against nations which are now zombie economies. Spain is buying more duct tape to holds its economy together while hoping nobody really checks up on how much its banks have lost on property. In Greece, they managed to squeak through their latest EU check but given that they have 30 billion Euros of taxes owed, the vast bulk of which will never get repaid...well, go figure how that makes them solvent. In Italy, there is, apparently a government but actually making any of the decisions required to repair the festering sore which is the government-regulatory complex just isn’t happening. Out east, the Czechs are in recession, there is'trouble at mill' in most other nations and newcomer Croatia has joined the EU while in recession. Poland is striving to avoid recession driven by neighbourhood economic woes while at least the Baltic states are growing but then again they underwent swinging recession as a result of their property bubble so a bounce was always on the cards.

Meanwhile in the economic powerhouse of Germany, Mrs Merkel is focusing on being re-elected which means every other vestige of Euro crisis is going untouched lest anybody makes a decision which might irk the restive German electorate.

Chancellor Angela Merkel (AFP Photo/Johannes Eisele)

So overall quite how anybody can suggest the Eurocrisis has ended is a touch challenging to rationalise with the truth beyond the bubble the political classes inhabit. The continental economy remains a festering mess of unemployment, government overspending and a lack of sensible mechanisms for the private sector to employ people. Clearly the people are restive and incredibly my inbox appears to be filling with last minute accommodation offers for the hotspots of the Mediterranean right as peak tourist season approaches. None of this remotely suggests that the Eurocrisis is over.

Moreover, the focus of Mrs.Merkel on her domestic re-election has left the entire eurozone once again on a precipice of panic as the EU avoids the tough reforms necessary to give Europe any chance of competing in an increasingly competitive world economy. The scandal of the European lost decade continues and the political classes appear incapable of even facing up to the truth, let alone alleviating the suffering of the citizens. 


Patrick L Young is expert in global financial markets working in multiple disciplines, ranging from trading independently to running exchanges.

• A Permanent Economic Emergency