In a note authored Astrid Schilo of Exane BNP Paribas on the politics and disfunction of the Eurozone, this drawing is shown to describe the current situation.
Photo: Exane BNP Paribas
This is really the story of the year in a nutshell.
The ECB has done an extoardinary amount of work in 2012 establishing itself as a real monetary authority that has the power to backstop the entire financial system (as exists in England, the US, and Japan). And that is super-powerful in and of itself (and it’s why Mario Draghi should be Person Of The Year).
But other than the ECB — which has the benefit of being undemocratic — the rest of the project remains a mess. There’s no political union, fiscal union, banking union, or common Eurozone budget, all of which need to exist for the project to actually work sustainably.
It’s a huge deal that the sovereign debt part of the crisis came to an end (for the most part) in 2012. But there’s massive heavy lifting yet to come.