Any other business

The eurozone is strong enough to kick out Greece if Syriza wins

Plus: France’s latest eruption of bureaucracy, and the Chinese bid for Club Med

10 January 2015

9:00 AM

10 January 2015

9:00 AM

Ever since European Central Bank president Mario Draghi declared himself ready, in July 2012, ‘to do whatever it takes to preserve the euro’, the likely disintegration of the single currency — as predicted by pundits such as yours truly over the preceding years — has all but disappeared from the comment agenda. The combination of a persuasive ECB leader with reform in some bailed-out eurozone states (notably Ireland and Spain) and an easing of bond market pressures, plus the iron will of Germany to see the euro survive, drove the break-up argument into retreat. Indeed it seemed for a while to have been vanquished, and that ex-president Valéry Giscard d’Estaing had been right when he told me, also in 2012, that ‘what you have been writing about the euro is completely crazy’.

But now the exit of Greece is back on the cards — and the accession of Lithuania as the eurozone’s 19th member (or, as it may be, early substitute as the 18th) is a reminder that currencies are dynamic reflections of political reality rather than static institutions in themselves. On 25 January, a Greek election may bring to power the hard-left Syriza party, which will seek to reverse austerity measures and renegotiate bailout debts. The Germans have been emitting mixed signals — that EU powers cannot be ‘blackmailed’ by Syriza, but that they do not wish anyone to leave the euro. In the end, however, the choice for Europe’s leaders may be between blatantly undermining a Syriza regime in the hope that it falls before it does irreparable harm — a very dangerous game — and issuing a serious ultimatum for expulsion.

At an earlier stage in this game, that second choice was impossible because of the domino risk; now, arguably, the rest of the bloc looks relatively stable, if economically stagnant, while Greece is a sore thumb. With the euro already at a nine-year low against the dollar in anticipation of the launch of quantitative easing by the ECB, a move towards ‘Grexit’ would add to short-term negativity. But in the longer term it would surely come to be seen as the inevitable response to an unstable member, rife with corruption and tax evasion, unwilling to pay the price of its own profligacy, that should never have been ushered into single currency in the first place.


Lithuania, meanwhile, has been ignoring ‘Welcome to the Titanic’ jibes and celebrating its eurozone status as a symbol of distancing itself a little further from Russia. The Baltic state’s most senior citizens know better than most of us that currencies are as impermanent as political eras: this is their sixth change of coinage since 1922.

Wise Billy

Speaking of the very old, last week’s roll-call of longevity in the business world omitted one final departure of 2014: that of Billy Salomon, former managing partner of the eponymous Wall Street trading firm, who died aged 100 but missed my early deadline. Billy was an ardent proponent of the value of partnership in investment banking, as opposed to letting traders enrich themselves by gambling with shareholders’ money. Sickened by scandals that afflicted Salomon Brothers after it became a public company (and later an arm of Citigroup), he once declared, ‘I’d be very happy to have my name removed from the door.’

Lights going out

In France for New Year, I was reminded that son et lumière was invented by a Frenchman — Paul Robert-Houdin, at the Château de Chambord in 1952 — as I was awestruck by the show projected on the Arc de Triomphe before midnight’s fireworks. This must have been as joyful for the technicians responsible as for the crowds in the streets, because the moment also marked the unveiling of a new creation in another sphere in which the French are unrivalled: workplace regulation. The compte personnel de prévention pénibilité is a system which awards credits towards early retirement for workers who suffer hardships such as night working, noise, vibration, heat or cold. Some 20 per cent of the labour force may be entitled to retire up to two years early as a result — including, we might guess, the entire cadre of the nation’s son-et-lumièristes.

Employers, meanwhile, will have to keep the compte for every employee, adding another huge task to their world-leading bureaucratic burden, while the moribund French economy must support another tranche of prematurely inactive citizens. Still, at least France also produces trenchant commentators, and I salute Gaëtan de Capèle of Le Figaro for his description of this and the rest of the Socialists’ programme, at a time when slashing of employment costs is so obviously and urgently needed, as ‘un magma réglementaire irrespirable [a suffocating regulatory lava flow], totalement déconnecté de la vie des enterprises’.

Club Med goes to China

‘Chinese billionaire to buy Club Med’ was another continental story that caught my eye. In recent times, ‘Club Med’ has been used as shorthand for southern members of the eurozone (as in ‘Can ECB action avert another round of Club Med bailouts?’) — the ruder alternative being ‘Pigs’ as an acronym for Portugal, Italy, Greece and Spain. That’s quite some billionaire, I thought, if he’s buying up euro-delinquent public debt in the way that brave speculators used to buy up North Korea’s. But it turns out Guo Guangchang of Shanghai — reported to be China’s 34th richest person — has bid €939 million for the original Club Med, the exotic beach-resort business that made the French look so chic back in the days when British holidaymakers preferred windswept caravan sites at home. Already under Chinese ownership are dozens of Bordeaux wine châteaux plus Gevrey-Chambertin in Burgundy and even the Campanile out-of-town hotel chain. As I have observed before, the pillars of western civilisation are not so much crumbling as passing into the possession of gentlemen from Shanghai.

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Show comments
  • davidofkent

    Surely the EU is so weak now that it must split.

  • greggf

    “The eurozone is strong enough to kick out Greece if Syriza wins”

    I take it Martin, you mean if Syriza is elected as a government of and by the people the rest of the EU’s financial wizards should excise the currency, €, from Greece….?
    Yes I can see that Brussels must feel strong enough to determine a nation’s politic by making such menacing noises in a fashion so reminiscent of Bertolt Brecht.
    Now where have I heard all that before….?

  • UnionJihack

    The exit of various nations from the Eurozone is always ‘back on the cards’. That is very much like the Scottish referendum debate which will always be somewhere on the cards until finally the right answer is given.

  • Brian Simpson

    Just a thought how about kicking Britian out.

  • When confidence is lacking in any currency, alternatives are sought.

    How far down the list are companies in Greece, when it comes to where to invest in.

    • god

      the bishops can rescue the Greeks so if kicked out after hosting the party for the Europe and world elite charitable sector to philanthroptize their familia interests and their common dependencies would cause …. And so why is Vancouver perhaps the next victims of destruction regarding their Olympia

      • No, because there is a lot of money flowing into Vancouver real estate from China.

        • god

          Oh the capitalist Hong Kong Chinese who like to have a foot in both economies just in case,. But the confucious institute prefers Mandarin, as does the provincial government, unlike the Cantonese who are long term Canadians. So pitting chinese ethnic religious long term Canadians against the ethnic new comers was a bit odd choice for the University Toronto Church and State governance of academia, don’t you think? And so purple faced clerics who assumed that hockey was all male canadians cared about, and thus CBC assumed broad casting in Punjabi would meet some weird concept that multi culturalism absolved them of the fact that indians of Canada are not from another nation. For some reason India now accepts a quasi concept of duel citizenship to unite all those East Indian Company English trade route set down to spin the Royals and their top !% allies for the next 2000 years. So the pope who visited to prop up the Bush’s re-election is not going to work for the rebublican conservative parliamentary alliance, these mergers are just not legal in spite of Nafta.

  • Ivan Ewan

    If I were more conspiratorially minded, I would say that the EU wrecked Greece and Greek Cyprus as a little gift to its pending new member, Turkey.

    But I’m not, so I’ll just ponder it instead.

  • green hackle

    The Lying Filth of the EU will Not be Kicking anybody out, Greece has had Enough of the Unelected Slime who think its there job to tell everybody what to do, They have Wrecked the Greek economy, And the Left Wing Filth will Try the same tactic Here,, If We Let Them..

    • Terry Field

      You are entirely correct, despite your execrable language.

  • Terry Field

    The petty details obscure reality. In the end, the economic model that is applied to Europe via the mechanism of the Euro will either succeed or fail. To date it is failing. Growth is nowhere, or actually negative. Compared to the rest of the world, it slides into relative, and in many parts, absolute poverty.
    If that continues, it will collapse, with the usual extreme violence the Europeans love so much.
    If the economic model performs better, then it will survive.
    The details do not matter.
    My bet is for survival, but I may well be wrong.
    Politics is moving in ways the media disallow for scrutiny. In France, Marine Le Pen is becoming a probable candidate for president, after the Hebdo catalyst. All over the continent, ‘right wing’ (silly title, but an understood label) parties are doing extremely well. and have great momentum at present.

  • Good News!!! and you are so stupid little pown, you re good boy with a good mason bring… Greece gave you the light malakas. You should kick your self out of the zone

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