The global financial crisis has taken Europe by surprise: it revealed a Union of 27 Member States that is anything but homogeneous and a Euro zone that is more fragile than it was thought it might become when first created.
Although part of a Common Market run by a set of unified rules, the economies of the 27 Member States reacted in as many ways to the economic downturn.
While countries like Germany were manifestly strong and barely let themselves affected by the crisis, other countries, like Greece, Ireland or Portugal proved quite vulnerable and are currently forced to make excruciating efforts to keep head above water.
What is most worrying is that the fiscal vulnerability of one country in the Euro zone directly affects equilibrium of all the other 16 EU countries using the same currency.
On the one hand, the more prosperous economies see themselves forced to help their vulnerable partners if they want to preserve credibility of the Euro currency on the international markets, but such commitment to help may become detrimental to their own economies.
On the other hand, those Euro zone countries which are not exactly top of the list when it comes to prosperity are even more affected, because they become easy prey of contagion, with investor confidence dropping dramatically.
This is exactly what has recently happened in Europe: the Greek bail-out was shortly followed by the Irish bail-out and now all kinds of rumors spread in connection to Portugal, Spain and even Italy.
The result was an acute depreciation of the Euro, accompanied by ever-growing fears of implied inflation.
Hence the entire system has become vulnerable and discussions have gone so far as providing funds for emergency financing, strengthening of EU budget rules and enhancing political powers over the fiscal area at EU level.
Certain voices have even gone so far as to say that some of the weak countries might be expelled from the exclusive club of the wealthy countries of the Euro zone so that confidence in the Euro currency may be restored.
This is hardly a viable scenario, since such a move would definitely have a catastrophic domino effect over all the financial markets not only inside, but also outside the Euro area.
However, rumors have always had their power over everything and investors have always lent an ear to them.
For the moment, even fortune-tellers may find it hard to say what is in store for the Euro, although a prudent investor might choose to place his money in more perennial assets (like pure gold bullion coins).
As for the Euro, it is best to wait and see what happens when the crisis is over.
Although part of a Common Market run by a set of unified rules, the economies of the 27 Member States reacted in as many ways to the economic downturn.
While countries like Germany were manifestly strong and barely let themselves affected by the crisis, other countries, like Greece, Ireland or Portugal proved quite vulnerable and are currently forced to make excruciating efforts to keep head above water.
What is most worrying is that the fiscal vulnerability of one country in the Euro zone directly affects equilibrium of all the other 16 EU countries using the same currency.
On the one hand, the more prosperous economies see themselves forced to help their vulnerable partners if they want to preserve credibility of the Euro currency on the international markets, but such commitment to help may become detrimental to their own economies.
On the other hand, those Euro zone countries which are not exactly top of the list when it comes to prosperity are even more affected, because they become easy prey of contagion, with investor confidence dropping dramatically.
This is exactly what has recently happened in Europe: the Greek bail-out was shortly followed by the Irish bail-out and now all kinds of rumors spread in connection to Portugal, Spain and even Italy.
The result was an acute depreciation of the Euro, accompanied by ever-growing fears of implied inflation.
Hence the entire system has become vulnerable and discussions have gone so far as providing funds for emergency financing, strengthening of EU budget rules and enhancing political powers over the fiscal area at EU level.
Certain voices have even gone so far as to say that some of the weak countries might be expelled from the exclusive club of the wealthy countries of the Euro zone so that confidence in the Euro currency may be restored.
This is hardly a viable scenario, since such a move would definitely have a catastrophic domino effect over all the financial markets not only inside, but also outside the Euro area.
However, rumors have always had their power over everything and investors have always lent an ear to them.
For the moment, even fortune-tellers may find it hard to say what is in store for the Euro, although a prudent investor might choose to place his money in more perennial assets (like pure gold bullion coins).
As for the Euro, it is best to wait and see what happens when the crisis is over.