Back in 2010-2012 I spent most of my professional time thinking about Europe and the the Euro. And I even wrote a book about this topic. And sometimes I feel like there is a chapter missing (=A THREAD)
The book was really about the future of the euro (but the publisher wanted to sell books, and named it "The Fall of the Euro" to create some drama)
amazon.com/Fall-Euro-Rein…
amazon.com/Fall-Euro-Rein…
The main point of the book was that the next crisis in the Eurozone would be political, as opposed to financial market driven.
The key underlying argument was that backstop infrastructure in the Eurozone had been enhanced sufficiently during 2010-2012 to support markets (via LTROs, OMT, ESM) to avoid run-away contagion and accidental market meltdown (break-up by accident).
The experience since then has generally shown that the most severe tension has come around key internal political events/elections: Greece 2015, France 2017, Italy 2018 (as the market saw the risk of political non-cooperation). Global financial shocks mattered less.
But then came the COVID shock, and the economic damage was so big that only 'whatever it takes' backstop was sufficient to support markets sufficiently, and the existing backstop infrastructure was put to a test.
And now we have a new legal dimension too (and this was probably a chapter missing in my Euro book). The German Constitutional Court (BverfG) yesterday not only pushed back against (unlimited) ECB bond buying, they also questioned who is the higher court, BverfG or ECJ.
The last point is really quite something. How can you have rule of law in the EU overall, if each country's courts ultimately decides what is right and wrong?
I will leave at that (but there is a new book chapter to write on this).
I will leave at that (but there is a new book chapter to write on this).
