Eurozone’s optimism

Efforts aimed at pulling the eurozone out of crisis are bearing fruit. The leadership has really led from the front, and German Chancellor Angela Merkel sounded prophetic over the weekend when she warned her contemporaries that the death of euro would mean the end of the concept of Europe, and ultimately a breakdown of world order into state-centric chaos.

 The relief package that has, of late, been agreed has emboldened measures to protect the private sector and rehearse the debt-stricken national treasuries across the continent. Striking a debt-relief formula and regularising macro-economic indicators still remain an outstanding concern, and one hopes the ray of hope that has emanated from the United States of a quarterly recovery can help buoy the sentiment.

The bullish fervour that has been witnessed from NYSE to Dubai and onward to the Asia Pacific markets underscores the fact that somebody somewhere is tackling the crisis head on. This is what that has been lacking as the Wall Street started sending unceremonial waves three years back with no one from the corporate or the governmental sector being bothered to look into it. The result is a pestering recession that continues to date and one which has impacted trillions of dollars of loss by bringing down investments worldwide to a naught. This time around, the news, however, from Brussels as it dealt with the resurgent Greek bond crisis is one of optimism. The 100 billion euros in funds to help the banks cover their losses along with a state-of-the-art and unprecedented deal through which the private sector will voluntarily go into bear losses to the tune of 50 per cent is a gigantic breakthrough in these odd times. But the uphill task is still very much there. The ailing economies of Spain and Italy that have been longing for an Athens-like deal haven’t been catered to, and coupled with this is the fragile equation of many of the central and Scandinavian economies of Europe.

Bailouts and debt-waivers are inevitable if the global economy is to be brought back from the brink. The concept of stimulus package that has worked in the United States to a great extent is in need of being reenacted in Europe and Asia. Merkel, Sarkozy and Cameron have a task to deliver, and the least that they could do is to streamline and implement the proposed 440 billion euro Financial Stability Facility and a trillion euro or so cushion facility to tackle with the deadly crunch. The optimism shouldn’t go astray.