Ever since European Central Bank president Mario Draghi declared himself ready, in July 2012, ‘to do whatever it takes to preserve the euro’, the likely disintegration of the single currency — as predicted by pundits such as yours truly over the preceding years — has all but disappeared from the comment agenda. The combination of a persuasive ECB leader with reform in some bailed-out eurozone states (notably Ireland and Spain) and an easing of bond market pressures, plus the iron will of Germany to see the euro survive, drove the break-up argument into retreat. Indeed it seemed for a while to have been vanquished, and that ex-president Valéry Giscard d’Estaing had been right when he told me, also in 2012, that ‘what you have been writing about the euro is completely crazy’.
But now the exit of Greece is back on the cards — and the accession of Lithuania as the eurozone’s 19th member (or, as it may be, early substitute as the 18th) is a reminder that currencies are dynamic reflections of political reality rather than static institutions in themselves. On 25 January, a Greek election may bring to power the hard-left Syriza party, which will seek to reverse austerity measures and renegotiate bailout debts. The Germans have been emitting mixed signals — that EU powers cannot be ‘blackmailed’ by Syriza, but that they do not wish anyone to leave the euro. In the end, however, the choice for Europe’s leaders may be between blatantly undermining a Syriza regime in the hope that it falls before it does irreparable harm — a very dangerous game — and issuing a serious ultimatum for expulsion.
At an earlier stage in this game, that second choice was impossible because of the domino risk; now, arguably, the rest of the bloc looks relatively stable, if economically stagnant, while Greece is a sore thumb. With the euro already at a nine-year low against the dollar in anticipation of the launch of quantitative easing by the ECB, a move towards ‘Grexit’ would add to short-term negativity. But in the longer term it would surely come to be seen as the inevitable response to an unstable member, rife with corruption and tax evasion, unwilling to pay the price of its own profligacy, that should never have been ushered into single currency in the first place.
Lithuania, meanwhile, has been ignoring ‘Welcome to the Titanic’ jibes and celebrating its eurozone status as a symbol of distancing itself a little further from Russia. The Baltic state’s most senior citizens know better than most of us that currencies are as impermanent as political eras: this is their sixth change of coinage since 1922.
Speaking of the very old, last week’s roll-call of longevity in the business world omitted one final departure of 2014: that of Billy Salomon, former managing partner of the eponymous Wall Street trading firm, who died aged 100 but missed my early deadline. Billy was an ardent proponent of the value of partnership in investment banking, as opposed to letting traders enrich themselves by gambling with shareholders’ money. Sickened by scandals that afflicted Salomon Brothers after it became a public company (and later an arm of Citigroup), he once declared, ‘I’d be very happy to have my name removed from the door.’
Lights going out
In France for New Year, I was reminded that son et lumière was invented by a Frenchman — Paul Robert-Houdin, at the Château de Chambord in 1952 — as I was awestruck by the show projected on the Arc de Triomphe before midnight’s fireworks. This must have been as joyful for the technicians responsible as for the crowds in the streets, because the moment also marked the unveiling of a new creation in another sphere in which the French are unrivalled: workplace regulation. The compte personnel de prévention pénibilité is a system which awards credits towards early retirement for workers who suffer hardships such as night working, noise, vibration, heat or cold. Some 20 per cent of the labour force may be entitled to retire up to two years early as a result — including, we might guess, the entire cadre of the nation’s son-et-lumièristes.
Employers, meanwhile, will have to keep the compte for every employee, adding another huge task to their world-leading bureaucratic burden, while the moribund French economy must support another tranche of prematurely inactive citizens. Still, at least France also produces trenchant commentators, and I salute Gaëtan de Capèle of Le Figaro for his description of this and the rest of the Socialists’ programme, at a time when slashing of employment costs is so obviously and urgently needed, as ‘un magma réglementaire irrespirable [a suffocating regulatory lava flow], totalement déconnecté de la vie des enterprises’.
Club Med goes to China
‘Chinese billionaire to buy Club Med’ was another continental story that caught my eye. In recent times, ‘Club Med’ has been used as shorthand for southern members of the eurozone (as in ‘Can ECB action avert another round of Club Med bailouts?’) — the ruder alternative being ‘Pigs’ as an acronym for Portugal, Italy, Greece and Spain. That’s quite some billionaire, I thought, if he’s buying up euro-delinquent public debt in the way that brave speculators used to buy up North Korea’s. But it turns out Guo Guangchang of Shanghai — reported to be China’s 34th richest person — has bid €939 million for the original Club Med, the exotic beach-resort business that made the French look so chic back in the days when British holidaymakers preferred windswept caravan sites at home. Already under Chinese ownership are dozens of Bordeaux wine châteaux plus Gevrey-Chambertin in Burgundy and even the Campanile out-of-town hotel chain. As I have observed before, the pillars of western civilisation are not so much crumbling as passing into the possession of gentlemen from Shanghai.