Throughout the past few months, all eyes have been on the European Union and its ability to solve its ongoing debt problems. While great progress had been achieved with the €100 billion debt reduction from the IMF, extensive loans and austerity measures enacted in Greece, all this was undone through the Greek Prime Minister announcing the now cancelled referendum. Since then, numerous Eurozone nations including Italy, Ireland, Spain and Portugal of show increasing signs of economic unease. Most notably, the fall of Prime Minister Silvio Berlusconi and the instalment of Mario Monti’s apolitical economic team have represented the dangerous shift in the encroaching situation.
This brings into place a stark question; as Tom’s blog points out, is the European Union no longer a viable economic community. With the inability of individual members to control their currencies, internal political bickering and reliance on France and Germany, the future seems grim. Germany, as the most powerful economy of the Eurozone, seems especially poised to shoulder this burden of others’ folly. In throwing its weight behind the collapsing edifice, it may be dragged into the European debt crisis, but neglecting the rescue may mean the collapse of its currency, and ultimately its banks and markets.