The euro zone crisis is over (apparently)

June 11, 2013

Francois Hollande went a step further than most at the weekend, by declaring the euro zone’s crisis “over”.

The French president was just the latest to claim the worst is over – or words to that effect – ever since the sovereign debt crisis started in early 2010. And he said it himself, nine months ago:

“Tonight, I have the confirmation that the worst is behind us.”Francois Hollande, October 2012

“The worst of the crisis seems to be over.” – European Central Bank board member Joerg Asmussen, April 2012

The worst is over, but risks remain,” – ECB President Mario Draghi, March 2012

We can say that the worst is behind us, but we cannot relax our efforts.” – Wolfgang Schaeuble, German finance minister,  and his old French counterpart , Francois Barion, March 2012

I think the peak of the crisis is behind us because since all the problems became public, a lot has changed, a lot has been done.” – Ex-ECB chief economist Otmar Issing, January 2012

“I think euro zone has turned the corner.” – Then-French finance minister, Christine Lagarde, January 2011

It seems the worst is over.” – Ex-ECB chief economist, Juergen Stark, July 2010

Perhaps the most unfortunate example was Asmussen’s claim last April, just before Spanish and Italian government bond yields started rocketing to record euro-era highs.

It’s also worth noting that  in April, a senior official in Brussels told Reuters, “All the skeletons are out of the closet… There are no more major issues in the pipeline.” Eerily reminiscent of Otmar Issing in January last year.

And what of Hollande’s latest claim that the crisis is over?

Certainly, some of the disaster scenarios seem have been headed off, but it’s worth noting the yield on the Spanish 10-year government bond – one of the bellwethers of the euro zone crisis – has risen more than 70 basis points since the start of May.

Saying the worst has passed is one thing, but declaring the crisis over might be a tad a premature.


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