In the wake of Cyprus, the euro can survive

Everyone hold your breath... and then chill out and have a Easter egg.

This weekend you should spend as much time as possible holding your breath or crossing your fingers. Storm clouds are gathering throughout Europe and the downpour could begin as early as Tuesday. First of all there is the ongoing Cypriot tragi-comedy; tragic for innocent islanders and retirees who just saw the island as a nice place to keep their savings and see out their days, comedy with regard to the performance of the Troika; judge, jury and executioner in the form of the European Central Bank, (ECB), the International Monetary Fund and European Commission.

Secondly, there is the Italian political imbroglio, which this week descended into chaos as Grillo, the leader of the neo-anarchist Five Star Movement, called M. Bersani and Berlusconi something almost unprintable and Bersani said, “only an insane person would want to govern this country, which is in a mess and faces a difficult year ahead”, following his failed attempt to comply with the President’s request to form a government, raising the likelihood of months of uncertainty and new elections. Rumours abound of a possible credit rating downgrade over the weekend.

Thirdly, Slovenia is quietly imploding and nudging its way onto traders’ screens. The political situation is not much better than Italy’s and the banking system has bad loans equal to 20 per cent of GDP. These resonances caused its government bond yields to soar this week, following the Cypriot "solution".

Along with these near-term, possibly explosive threats, the Eurozone has to continue to cope with the slow-burn problems of Spain, which is failing to meet deficit reduction targets and, perhaps most frighteningly, France’s slowdown. Throw in the chasm opening up between President Hollande and Chancellor Markel and the Euro’s prospects may seem dire.

Notwithstanding all of the above, I remain cautiously, but resolutely certain that the Euro can survive, at least for the foreseeable future - meaning the next three years, say.

If we have learnt nothing else over the last few years it should be that the political will to ensure its survival is enormous and that the ECB is prepared to almost totally divorce itself from its Bundesbank heritage to play its part. Witness the protest resignations of two senior Bundesbankers from the ECB since the crisis broke. Merkel will masterfully persuade the German people to provide just enough largesse to southern Europe, without enraging her populace beyond breaking point, she will probably bend just enough on austerity to satisfy Hollande’s calls for growth, and after the elections she will probably even support the issuance of joint and several Eurobonds, which put all nations on the hook to the same degree. Finally, this Thursday, Draghi will give a masterful performance at the post-ECB meeting press conference, in an echo of his famous "whatever it takes" speech last year.

Cyprus can become a tragic memory, Italy is rich and will survive, Slovenia is small, and Spain and France will slowly respond to growth enhancement. Meanwhile, the US will surprise us all with its outperformance this year, once again acting as an economic locomotive.

So, let your breath out and have an Easter egg, if that is your fancy.

Look at these lambs. They're not worried about Cyprus. Photograph: Getty Images

Chairman of  Saxo Capital Markets Board

An Honours Graduate from Oxford University, Nick Beecroft has over 30 years of international trading experience within the financial industry, including senior Global Markets roles at Standard Chartered Bank, Deutsche Bank and Citibank. Nick was a member of the Bank of England's Foreign Exchange Joint Standing Committee.

More of his work can be found here.

Show Hide image

It's Gary Lineker 1, the Sun 0

The football hero has found himself at the heart of a Twitter storm over the refugee children debate.

The Mole wonders what sort of topsy-turvy universe we now live in where Gary Lineker is suddenly being called a “political activist” by a Conservative MP? Our favourite big-eared football pundit has found himself in a war of words with the Sun newspaper after wading into the controversy over the age of the refugee children granted entry into Britain from Calais.

Pictures published earlier this week in the right-wing press prompted speculation over the migrants' “true age”, and a Tory MP even went as far as suggesting that these children should have their age verified by dental X-rays. All of which leaves your poor Mole with a deeply furrowed brow. But luckily the British Dental Association was on hand to condemn the idea as unethical, inaccurate and inappropriate. Phew. Thank God for dentists.

Back to old Big Ears, sorry, Saint Gary, who on Wednesday tweeted his outrage over the Murdoch-owned newspaper’s scaremongering coverage of the story. He smacked down the ex-English Defence League leader, Tommy Robinson, in a single tweet, calling him a “racist idiot”, and went on to defend his right to express his opinions freely on his feed.

The Sun hit back in traditional form, calling for Lineker to be ousted from his job as host of the BBC’s Match of the Day. The headline they chose? “Out on his ears”, of course, referring to the sporting hero’s most notable assets. In the article, the tabloid lays into Lineker, branding him a “leftie luvvie” and “jug-eared”. The article attacked him for describing those querying the age of the young migrants as “hideously racist” and suggested he had breached BBC guidelines on impartiality.

All of which has prompted calls for a boycott of the Sun and an outpouring of support for Lineker on Twitter. His fellow football hero Stan Collymore waded in, tweeting that he was on “Team Lineker”. Leading the charge against the Murdoch-owned title was the close ally of Labour leader Jeremy Corbyn and former Channel 4 News economics editor, Paul Mason, who tweeted:

Lineker, who is not accustomed to finding himself at the centre of such highly politicised arguments on social media, responded with typical good humour, saying he had received a bit of a “spanking”.

All of which leaves the Mole with renewed respect for Lineker and an uncharacteristic desire to watch this weekend’s Match of the Day to see if any trace of his new activist persona might surface.


I'm a mole, innit.