Photo: Goldman Sachs
All eyes are on Europe and whether or not the eurozone countries will be able to keep the euro together. Currently, the buzz is that Greece could soon exit the euro currency, which could bring more volatility to the debt-laden union.Jim O’Neill, Chairman of Goldman Sachs Asset Management, writes about the challenges that the eurozone faces in his latest Viewpoints note.
He also offers a quick an easy fix, which he believes could end the crisis this weekend. From his note:
…If the European politicians want the Euro to survive, they need to start by being truly as European as they claim.
Three easy steps could put an end to this crisis this weekend. One, announce that from now onwards, for all G7, G8 and G20 meetings, they will be represented by one, the Euro Area, and no longer any one from France, Germany, Italy or elsewhere. This would also open the doors for dramatic improvements in world governance. Two, a forward commitment – not today – to agree on a future for true Euro Eurobonds, which can easily surmount German objections by linking it to achievement of fiscal sustainability, perhaps measured by the IMF or an even more independent body. And three, use of the European Stability Mechanism (ESM) to refinance troubled Euro Area banks that are systematically important, if not others.
Will any of these steps happen? Well, if they don’t, how can they seriously expect the Euro to survive?
Unfortunately, it seems that the odds are these steps won’t happen. At least they won’t happen this weekend.