Content about Euro

European stock markets today, Tuesday 22 May, opened in the green and remained there until well into the afternoon.

In an unexpected way, the issue of a bank run in the Eurozone was raised in the G8 summit at the weekend, with remarks ranging from scaremongering to 'advices', about how the new European Stability Mechanism (ESM) should act as lender of last resort for Eurozone's banks.

ROME – Increasingly, one hears predictions that the euro will go the way of the gold standard in the 1930s. And, increasingly, the reasoning behind such forecasts seems persuasive. But does that mean that the euro doomsayers are right?

Fortunately Greece is the only Eurozone member that faces existential problems to stay or leave the euro area. Ireland and Portugal got last week the seal of 'good direction' by both the Ecofin and the Eurogroup. The two are meeting the programme targets to cut down deficits. As for Madrid, the Rajoy government got the approval of Brussels for its bank recapitalisation plan. Last but not least Holland even without a government manage to put together a parliamentary agreement to cut down fiscal deficits.   But lets take one thing at a time.

Even from a business point of view, the spectacle of the newly appointed French President François Hollande running to Berlin, practically minutes after his official inauguration, was by itself a strong message; France is not to question the German prerogative in the European Union and of course in the Eurozone.

The rating agency Moody's downgraded today, Friday 18 May, 16 Spanish banks, as it did yesterday for 24 Italian lenders.

Earlier on the agency had downgraded four regions of Spain. Moody's cut down the grade of some of those Spanish banks by three notches. The agency said that this was due the the increasing danger of the Spanish economy entering in a recession and also because of the limited character of the measures the Madrid government introduced to support the country's ailing banking industry.

There are converging estimates that a potential Greece's exit from the Eurozone may cost up to one trillion. A large part of it will be born by this country itself. It will income losses over a number of years, due to an unprecedented recession and uncontrollable inflation. The largest part of it however will be born by the other weak Eurozone countries. There will be also huge losses for central countries like France, Germany and Holland due to the exposure of their lenders to the Greek banking system.

With the dignitaries in Brussels, Berlin, Paris and Washington having already termed the next Greek legislative election a referendum, with one question to be answered by voters 'stay or leave the Eurozone', Greek citizens continue to be bewildered.

Before flying out to the G8 Summit at Camp David and the NATO Sumit in Washington, D.C., European Commission President José Manuel Barroso sent out a clear message to Greece: swim together or sink alone.

An agreement on the Second Economic Adjustment Programme and the debt reduction agreement has been a consistent focus of the Commission in order to to concentrate efforts on growth and jobs througout Europe, but more specifically in the debt-ridden Greece.

The Eurogroup meetings of 14 and 15 May confirm that the Eurozone is ready to discuss with Greece some changes in the Memorandum of Understanding (MoU) the country has signed with its 16 partners in the single currency.

European stock markets opened today deep in the red, mainly due to the political uncertainty reigning in Greece. The probability for Athens to have a government diminished during  the weekend, with the country's political parties unable to bridge their differences. The formation of a coalition government now seems highly improbable in Athens.