The euro zone has gone from the emergency room to rehab. As often with patients, the question is how to maintain a stiff exercise regime now the immediate danger is over.
When Julius Caesar crossed the Rubicon in his bid to take control of Rome, he is reputed to have said “alea jacta est” (the die is cast). Matteo Renzi, soon-to-be Rome’s new master, has also rolled the dice. In doing so, he is taking big risks. Given Italy’s mess, one can only pray that his gamble pays off.
Many eurosceptic treatises, such as the recent report saying the Netherlands would be better off quitting the European Union, are exaggerated and unconvincing. But mounting euroscepticism could still have a silver lining if it helps those wishing to reform the EU advance their agenda.
An independent Scotland will not keep the pound. That’s despite this being the express wish of the Scottish government, which is campaigning for independence in September’s referendum. The reason is that it’s hard to see the rest of the UK agreeing to such a deal – except on terms that would affront Scotland’s amour propre.
How should the world outside America view Ben Bernanke’s legacy? Should it lambast the U.S. Federal Reserve chairman, who retires later this week after an eight-year stint, for failing to predict the financial crisis and being slow to react when it hit? Or should it laud him for pulling out the stops to save the financial system and pep up the U.S. economy after Lehman Brothers went bust in 2008? Or should non-Americans be worried that the process of unwinding Bernanke’s unprecedented money-printing policy will deliver a bad case of whiplash?
A year after David Cameron promised a referendum on EU membership, the British prime minister and his Conservative party are alienating potential allies across the Channel. He needs to pitch reforms that benefit the whole bloc, not just pander to eurosceptics. Otherwise an “Out” vote looks more likely.
A weekend pact between Matteo Renzi and Silvio Berlusconi offers new hope to Italy. The constitutional reform deal between the leader of Italy’s largest party and the leader of the opposition addresses one of the country’s biggest problems: its ungovernability. Now Renzi, who runs the centre-left Democratic Party, needs to put his energy behind key economic reforms, especially jobs and public spending.
The hot phase of euro crisis may be over. But the zone will limp on for years with low growth and high unemployment unless further action is taken on three fronts: bank balance sheets must be cleaned up, monetary policy loosened and more free-market reforms adopted.
Italy seems continually condemned to disappoint. The economy has barely grown in 20 years. The younger generation is languishing without opportunity: youth unemployment stands at 41 percent. So many chances to reform the country have been wasted – and many by Silvio Berlusconi, who was finally expelled from the Senate last week after being convicted of tax fraud.