Angela Merkel: Euro Crisis Will Last Another 5 Years

Just in case you thought the Euro crisis was ending any time soon…Angela Merkel has provided us with a timeframe in which to expect a resolution – 5 years.  This weekend she said:

Mrs Merkel said that though Europe was on the right path to overcome the crisis, she added: “Whoever thinks this can be fixed in one or two years is wrong.”

“We need a long breath of five years and more,” she told a conference in Sternberg, Germany. “We need rigor to convince the world it’s worth investing in Europe.”

The Euro crisis will remain a huge risk to the global economy.  And unfortunately, this sort of leadership isn’t helping matters.  The solvency crisis at the national level will continue as long as these countries can default on the currency they can’t create.  The interesting evolution of this crisis will be the political will behind austerity and the ECB’s actions.  Austerity clearly isn’t generating an economic recovery.  And the ECB is barely holding things together with their implicit backing of government bonds.  These countries clearly aren’t going to grow their way out of their debt problems.  That creates a substantial risk of two things:

  • A lack of political will to continue the ECB’s actions.
  • A serious risk of public uprisings.

Five years is a long time to expect these matters to continue without a substantial change in policy direction….


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Cullen Roche

Mr. Roche is the Founder of Orcam Financial Group, LLC. Orcam is a financial services firm offering research, private advisory, institutional consulting and educational services.

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  • SS

    There’s no way this crisis doesn’t flare up again. 5 years? You have to be kidding me. These people have no idea what they’re dealing with.

  • DanH

    This assumes they can even integrate on a political level to the degree necessary to fix the problem. 5 years might be optimistic.

  • Septimus Octavius

    I do not think it will take as long as 5 years for the euro to implode.


  • The Dork of Cork.

    Well its been 5 years already.
    Indeed the collapse of these societies started when the project went into high gear back in 1986.
    If there is no society there is no society to collapse.

  • Mikael Olsson

    Sooooo happy Sweden stayed out of the Euro mess. Yes, we had pundits warning us about exactly what is happening right now. I guess enough people listened in the public vote.

  • Andrew P

    5 year, 10 years, whatever it takes to settle the political structure of Europe. Eventually, it will be settled, and my prediction is a strong, but smaller Federal/Imperial EU, and some current members becoming independent countries. Secession may involve a civil war in some cases.

  • Johnny Evers

    How long has the Japanese crisis lasted? And isn’t the U.S. in Year 5 of its financial crisis?
    These are long-term issues created by rising debt and aging populations with no simple solutions.

  • Mikael Olsson

    No simple solution? Sure there is, monetize some of the debt. Tada.

  • Johnny Evers

    I would counter by saying that when you issue debt that you cannot pay back (but imagine will be simply rolled over forever) then you are already monetizing the debt. You have issued a financial asset and spent the money.
    Maybe that will work, but for now we just seem to be treading water, at best, by doing that.

  • Mikael Olsson

    You’re not wrong. Except with the debt up the fiscal hawks have something to hawk about.