14 Jul 2015
Europe and Greece: a push for greater integration - BBH
FXStreet (Guatemala) - Analysts at Brown Brothers Harriman, in respect of the Greek debacle , argue that monetary union is still evolving and that the Greek crisis does not end that process.
Key Quotes:
"Instead, recognizing the strains that have been caused, European officials will seek to heal the apparent fissures. We think it is politically naive to expect Europe's elite to simply give up on the European Project. There might have been a Plan B for Greece, but there is not one for Europe.
The European Project dates back to efforts after WWII to avoid another ruinous war in Europe. The way to do it is form a community and integrate the economies like never before. While the timing of monetary union, and the form it took, was a result of specific historic conditions (e.g. the fall of the Berlin Wall), it was consistent with, and extended Europe's evolutionary path.
Manchau and others argue the acrimony, and Germany's pursuit of narrow nationalist self-interest, mark the end of the road. More likely, it is not. While it is unlikely to happen immediately, we expect there a strong effort, led by Germany and France, to push for greater integration. Monetary union is not complete. The banking union is incomplete.
It is incumbent on the critics to explain the future of a non-integrated Europe. Is it a resumption of tribal warfare? Is real per capita income going be higher or lower for most Europeans in they return to national currencies? What is the future of a handful of relatively small countries, with aging populations, in a world dominated by the likes of the United States, China, and India? Integration, of course, has problems and challenges, but so does the opposite. Ultimately, we find much wisdom in Benjamin Franklin's framing of the issue to the thirteen original colonies on the eastern seaboard of North America: "Hang together or hang separately."
Key Quotes:
"Instead, recognizing the strains that have been caused, European officials will seek to heal the apparent fissures. We think it is politically naive to expect Europe's elite to simply give up on the European Project. There might have been a Plan B for Greece, but there is not one for Europe.
The European Project dates back to efforts after WWII to avoid another ruinous war in Europe. The way to do it is form a community and integrate the economies like never before. While the timing of monetary union, and the form it took, was a result of specific historic conditions (e.g. the fall of the Berlin Wall), it was consistent with, and extended Europe's evolutionary path.
Manchau and others argue the acrimony, and Germany's pursuit of narrow nationalist self-interest, mark the end of the road. More likely, it is not. While it is unlikely to happen immediately, we expect there a strong effort, led by Germany and France, to push for greater integration. Monetary union is not complete. The banking union is incomplete.
It is incumbent on the critics to explain the future of a non-integrated Europe. Is it a resumption of tribal warfare? Is real per capita income going be higher or lower for most Europeans in they return to national currencies? What is the future of a handful of relatively small countries, with aging populations, in a world dominated by the likes of the United States, China, and India? Integration, of course, has problems and challenges, but so does the opposite. Ultimately, we find much wisdom in Benjamin Franklin's framing of the issue to the thirteen original colonies on the eastern seaboard of North America: "Hang together or hang separately."