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June 17, 2013

Is the Eurozone debt crisis really over?

hollandeWhen French president Francois Hollande declared the Eurozone debt crisis over this weekend, did he know what he was talking about?

Speaking to Japanese business leaders, Hollande tried to allay the fears of his audience by stating that the eurozone is now stronger after the crisis. He pointed to increased stability and solidarity among European states, despite riots in Greece and Spain, and climbing unemployment elsewhere. In his own backyard, President Hollande is presiding over the highest French unemployment in 15 years.

So the short answer would appear to be no, Francois Hollande doesn’t know what he is talking about. Especially as even the IMF recently stated that Greece was given too harsh a deal in exchange for its two bailouts, and the continuing fears about Cyprus and Italy.

Mr Hollande appears to be staking his claims on the fact that analysts are expecting Greece to recover rather than exit the Euro and fall into a depression. Investors seem convinced that the eurozone will get through the crisis without a country being forced to leave, but this does not mean the crisis is over.

The Eurozone’s collective economy is still in recession, having shrunk for six straight quarters. Unemployment continues to show that austerity isn’t working.

But still, cest la vie!

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