“We wish you well”, that is what British Prime Minister Cameron said during European Summit last week, when he is the only one refusing to agree the new EU treaty. He went even further saying “As long as I am the Prime Minister, this country will never join the euro!”
In my early blog of Four Potential Scenarios of Eurozone Debt Crisis, I said “the only solution to all crises has to be some form of unity. However, that is always the hardest thing to do in the mankind history.” The European summit clearly demonstrated the frictions between each parties and the difficulty to move forward with different agendas.
As Mohamed El-Erian, CEO of PIMCO, said in his CNBC interview,
Every week, if not every day, Europe influences stocks, overwhelms sector-specific news, and frustrates careful security selection. The result is wave after wave of manic risk on and risk off days, together with spiking correlations and unsettling volatility.
You must be wondering why these economists and government officials seem have no clue what is the right thing to do. The simple fact is, euro problem is unprecedented.
There was never euro before 1999 in the history. While western financial and political decisions are largely built on studies from past events, the euro problem becomes an experiment which is the study subject by only the future. Now, any prediction about where the crisis is going to is merely speculating or at best guessing.
Some central banks in Europe have started weighing contingency plans to prepare for the possibility that countries leave the euro zone or the currency union breaks apart entirely. The break of euro is no longer unthinkable.
I guess “we wish you well” is really probably the best we can say now.