In September 2016, the 2001 Nobel Prize recipient economist Joseph Stiglitz said that the euro area was about to disappear and called for the unrealistic creation of two separate areas, one for northern Europe and another one for southern Europe. While Cyceon identified a growing consensus that the euro would not survive one more major crisis in its current configuration, Stiglitz now appears more and more as the tip of the iceberg on which the euro area would soon disintegrate.
In case the Italian referendum gives a no, long-term interest rates will keep increasing substantially forcing “the ECB to record terrible losses,” wrote Charles Gave, Economist and President of the Institut des Libertés. The monetary union should be the next casualty of the rising anti-establishment tide and therefore splinter within the next five years, warned Jim Mellon, one of the few investors who have supported and predicted the victory of the pro-Brexit camp in June 2016. Against this backdrop, the deepening popular rejection of the European Union (EU) and its leaders does weaken the euro area.
“We have reached the limits of the idea of the single market,” said German Vice-Chancellor Sigmar Gabriel while “we are staring into the abyss” added his Social Democrat ally and Austrian Chancellor Christian Kern. Between the warnings from financiers, the complaints from politicians and the endless crisis – cf. Italian banks – the very existence of the euro area – and of the EU – seems indeed compromised.