Europe is in the midst of a existential crisis in which it must choose the European Monetary Union, or allow it to dissipate, according to Goldman Sachs’ Jim O’Neill.
And according to Jim O’Neill, there’s really only one way out of this.
Improving Europe’s competitive position was, and still is, about finding more people to work and in a productive way. Fast forward to today, Europe’s leaders could benefit by going with a begging bowl to SWFs around the world, as well as to Japanese investors, with some creative ways of presenting European assets to them. I can’t see why the notion of all countries having 60 pct of GDP in debt being converted into a true Euro bond isn’t going to eventually emerge from this. I understand why some countries like Germany object, but if you wanted EMU, you have got to start delivering it. On a high level, this crisis is all about whether Europe’s policymakers want this thing to survive or not. A common Euro-denominated bond for the permissible amount of debt the Treaty allowed , perhaps supported with Trichet’s recent idea of a European Finance Minister, seems to me the only true way out of this mess. It could well be, in addition, that for those with a lot of debt beyond this, real trophy assets – more of the Manchester United than City variety! – might have to be put on the table. If we don’t have this sort of forward- looking thinking, it is starting to look as though the great post-war European creation could be under major stress.
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