PARIS (Reuters) – What a difference a few weeks make.
In early June, doomsayers were predicting the demise of the euro after a 110 billion euro ($145.2 billion) bailout for Greece and a $1 trillion financial safety net for the rest of the 16-nation single currency area failed to calm market panic.
European banks were hardly lending to each other, the euro had hit a four-year low against the dollar, and there was widespread talk that Greece would have to default on its debt.
“We are assigning a higher and higher probability to a break-up of the euro zone,” Gina Sanchez, director of equity and asset allocation strategy at Roubini Global Economics told a Reuters Summit on June 8.
“I don’t want to overstate that. It’s not our base case, which is they muddle through,” she said.
Among the grounds she cited for a possible collapse were a lack of political will to cut budget deficits and Germany’s reluctance to foot the bill for rescue packages.