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Euro Breakup in the Cards?

The Economist “speculated” last week about the kinds of contingency plans Angela Merkel might have on her desk for the breakup of the Euro. Obviously, if such plans existed, they ought to be kept secret so as to not panic the markets. Right?

The Finnish foreign minister disagrees:

“We have to face openly the possibility of a euro-break up,” said Erkki Tuomioja, the country’s veteran foreign minister and a member of the Social Democratic Party, one of six that make up the country’s coalition government.

“It is not something that anybody — even the True Finns [eurosceptic party] — are advocating in Finland, let alone the government. But we have to be prepared,” he told The Daily Telegraph.

“Our officials, like everybody else and like every general staff, have some sort of operational plan for any eventuality.”

This little slip was quickly rowed back by the Finnish minister for European affairs, as well as by other European leaders. Angela Merkel even came out in support of Mario Draghi’s now weeks-old statement that the ECB would do “whatever it takes” to preserve the Euro. Nothing to see here, move right along.

But the cat is edging out of the bag. That most European countries have contingency plans is not surprising—it would be irresponsible if leaders didn’t think through worst case scenarios and have plans at the ready. The real news is that leaders are increasingly talking about these plans openly. Could a full-blown currency crisis be closer than anyone thinks?

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  • Jim.

    If the best solution that France and the Netherlands can come up with is to go Socialist and demand German funding, then a breakup is pretty much a foregone conclusion.

    The lights are going out in Brussels. They will not be relit in our lifetimes, if ever.

    On the plus side, that can allow the lights of freedom, democratic rule, and fiscal prudence to be rekindled across the continent.

    Once the dust settles, this will be a net gain for Europeans and the world.

  • Corlyss

    They might as well talk about it in the open. Their machinations behind the scenes, their bandaid fixes for their chronic congestive heart failure, their repeated announcements that they’ve found the cure, haven’t fooled anyone. Most thinking adults with even a modicum of understanding about the underlying problem remembers when there wasn’t a Euro. It hasn’t been a fixture of life on earth for even 20 years. If there was life before the Euro, there will be life after the Euro. No Euro has always been an option, whether appealling to the players or not. The markets are just waiting for some finality one way or the other. Hint: it ain’t gonna be more integration.

  • Snorri Godhi

    Corlyss is broadly right; and other than the fact that nobody in France or the Netherlands (or indeed nobody in Italy who is compos mentis) expects a bailout, Jim is broadly right as well.

  • Eurydice

    Well, they’ve been talking openly for months about ejecting Greece – maybe now they’ve stopped pretending it wouldn’t mean a breakup of the euro.

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