MacroScope

Who expects euro bonds? Look outside the euro zone

June 21, 2012

It’s already been established that economists’ predictions about the euro zone’s future hinge largely on where their employer is based. Euro zone optimists tend to work for euro zone banks and research houses, and euro zone sceptics for companies based outside the currency union.

It somewhat undermined the idea their analyses are based purely on hard-headed economics, and less on national factors.

There was an echo of that in this week’s of economists and fixed income strategists, who were asked whether they expect euro zone leaders will agree to the issuance of a common euro zone bond, as backed by new French President Francois Hollande.

Only seven out of 18 analysts thought such a bond would come to fruition.

And of those seven? Six hailed from institutions based outside the euro zone, with a German private bank making for the remaining one.

There are several conclusions that can be drawn from this. Firstly, it could be that only economists from non-euro zone organisations think the region’s crisis will escalate enough for Germany to accede to the formation of a fully-fledged debt union.

That backs up the sort of bias we saw in last week’s poll.

But also, it could be that some of these economists from outside the euro area, whose area of specialisation is not the euro zone, haven’t followed the developments there closely enough to fully appreciate the monumental political logjams (read: Berlin opposition) that stand in the way of mutualised euro zone government debt.

Of course, the corollary is that large numbers of analysts working for euro zone-based institutions are simply too close to the woods to see the trees.

Either way, we’re left with an alarming lack of consensus about important issues facing the euro zone – or at least any consensus devoid of things like national bias.

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