Chill out on the zone – Part 1

There is nothing more irritating than someone being deliberately ‘out of consensus’ and priding themselves on their own bravery. Right now, heroes from the commentariat are jumping over themselves to declare the death of the eurozone, the end of the euro and the descent of the continent into fascism, madness and apocalypse. This is only a mild exaggeration.

For the eurozone to break up, a politician would have to wilfully make that decision. Since pulling your country out of the eurozone is, in fact, the worst case scenario, it is hard to envisage this making sense to anyone.

Leaving the Zone would mean swapping an entire nation’s cash into a new currency overnight, in a simple step wiping out far more wealth than any increase in taxes or mass sacking of civil servants could manage. If Greece left, responsible money managers would have to assume the same outcome was on the table for Italy, Spain and Portugal, sparking a rapid race to pull cash from those countries and dump it in German deposits. Such a sudden withdrawal of funds would send those countries entire banking systems insolvent overnight.

In the leaving nation there would be chaos, perhaps nihilism and anarchy. All contracts denominated in euros would be under question, and all hiring, investment and swathes of commerce would halt until the dust settled.

But the effects would be more dire than that. Borders would close as transporting cash out of the now-pariah nation would likely be made illegal, shattering one of the Zone’s more inspired achievements. Reactionaries across the spectrum would surge in influence, as anarchists to neo-fascists would offer simplified, fundamentally incorrect yet convincing narratives for the calamitous times.

There was quite a scary moment in September when governments in Rome and Athens fell in the same week – it looked like economic affairs had finally bubbled into the political instability so many feared. And what did we get? Reasoned technocrats in power and the fall of one of the more ridiculous leaders of our times.

The fearless commentators chiding politicians for their timidity and adherence to clumsily constructed Zone law, are simultaneously predicting the same will cause all of the above by pulling the trigger on the entire continent. Chill out.


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