Johan Van Overtveldt provides comprehensive documentation showing that the political dithering so apparent in the most recent euro crisis has in fact been the hallmark of the euro project from the start.
--Anil Kashyap, Edward Eagle Brown Professor of Economics and Finance, The University of Chicago Booth School of Business
From noted economic journalist Johan Van Overtveldt, an up-to-the-minute examination of the fate of the Euro.
In a process that began with the Maastricht Treaty of 1991 and concluded on January 1, 1999, 11 Western European countries made the euro the European Union's single currency, and the European Central Bank (ECB) the EU's only policy-making central bank. Bringing together Germany, France, Italy, and other European countries into a monetary union with a single currency and a single monetary policy could only ever result in major imbalances between the member countries, thus threatening the EU itself. This was recognized from the start by many economists and other observers, and the political elite paid elaborate lip service to these warnings. However, no one really followed up on these risks in terms of actions and reforms. Instead, the politicians seemed to indicate, directly and indirectly, that if the EU showed unity, the conditions to turn itself into a well-functioning monetary union would simply come about automatically. Moreover, given the imperative to work together more closely, the monetary-union effort would strengthen the political union among the euro-countries. Thus, in spirit, the process of monetary union was often seen as a means to an end.
With that reasoning, the political elite supervising monetary union turned a great idea--the creation of a unified currency for Europe--into a huge gamble. Implicit in their reasoning was the idea that Europe's leading politicians would always be able to come up with an adequate solution to any crisis that might occur. As the former Belgian prime minister and European Union leader Jean-Luc Dehaene repeated relentlessly: "The idea of a unified Europe grows and becomes reality through crises. We need crises to make progress." Dehaene and like-minded European politicians never seriously considered the possibility of an insoluble, catastrophic crisis that could potentially crash the entire EU effort.
For ten years, from 1999 to 2008, it seemed that the politicians' claim was vindicated. Although there was little substantial progress toward real political union within the euro area, the euro and the euro countries in general prospered, despite a string of major shocks like the bursting of the dotcom bubble, the 9/11 terrorist attacks, and the wars in Afghanistan and Iraq. But things changed dramatically with the financial crisis of 2007-2008. In January 2009 Barry Eichengreen, professor of economics and political science at Berkeley, wrote that "what started as the Subprime Crisis in 2007 and morphed in the Global Credit Crisis in 2008 has become the Euro Crisis in 2009".
After its immediate impact, the crisis caused the financial and capital markets to worry about the so-called sovereign risks, i.e. countries running the risk of becoming insolvent. Although budget deficits in countries like the United States and the United Kingdom were much larger than the aggregate data for the euro area, markets started to home in on the risks posed by countries inside the European monetary union. Markets recognized that the enormous problem facing everyone in the union was the long-term working of the monetary union itself. Eichengreen's "Euro Crisis" is all about the sustainability of EMU and the single currency.
By early 2009 the structural imbalances within the euro area and especially the untenable situations building up in Greece, Portugal, Spain, and Ireland were there for everybody to see. The first reaction of the political leadership was denial of any structural problem whatsoever. The second reaction was recognition of the crisis situation, but absolute denial of any link between that crisis and the workings of the monetary union. Eventually, a third phase set in: the search for external villains to blame. Those villains were found in the greed, speculation, and irresponsibility of the financial markets. As the French saying goes: "les excuses sont fait pour s'en server" ("excuses are made to take advantage of").
Fundamentally, however, the gigantic problems facing the EMU, and the euro as a currency, have little to do with either alleged criminal behavior in the financial markets or with the financial crisis of 2007-2009. The crisis of 2009-2010 was an accident waiting to happen. It could have happened earlier, or the clash could have been postponed for several more years; but given the the basic characteristics of the EMU-set-up, a major crisis was simply unavoidable. Untenable imbalances within the monetary union were enshrined in the different treaties, pacts, and political agreements that led to the creation of the euro in the first place, and guided its first ten years. That politicians never acted on this reality to make them the prime culprits of the long and highly painful death agony of the euro.
The structure of this book is as follows: Chapter I gives an overview of the birth of the euro. Understanding this history is essential to understand the anomalies built into the project from the beginning. These anomalies form the subject of Chapter II, along with an analysis of how they led to the situation that turned Greece, Portugal, and Spain into euro-destroying economic disaster areas. Chapter III shows how this was not an unforeseeable situation, as Europe's history is filled with earlier failed attempts to build monetary unions. Chapter IV is focused on Germany, by far the most important country within EMU, and why the chances of Germany leaving the union are much higher than is generally assumed. The book concludes with an analysis of what lies in wait for the remains of the monetary union--and for a deeply divided and troubled continent in general. Either the EMU transforms itself fundamentally or it disintegrates, and the likeliest outcome is the latter.
Johan Van Overtveldt discusses with RT the challenges facing European leaders in coming to an agreement about saving the Euro. (Dec. 8, 2011)
Title The End of the Euro
Subtitle The Uneasy Future of the European Union
Author Johan Van Overtveldt
Title First Published 15 November 2011
Nb of pages 208 p.
Publication Date 15 November 2011
Nb of pages 208
Dimensions 6 x 9 in.
Weight 18 oz.
List Price $24.95
Nb of pages 240 p.
Publication Date 15 November 2011
Nb of pages 240
List Price $9.99
Johan Van Overtveldt on WGN Midday News
Johan discussing the eurozone with WGN Midday News (January 23, 2012).
End of the Euro presskit ( pdf 172 KB )
Johan Van Overtveldt discusses the Greek default and collapse of the Greek banking system with PRI's The World with Clark Boyd. (Sep. 22, 2011)
Johan Van Overtveldt discusses the measures necessary to avoid economic meltdown.
Johan discusses the looming Greek default crisis and the possibility of Germany's departure from the Eurozone on PRI's The World with Clark Boyd.
Czech President Calls Eurozone a Straightjacket
Johan van Overtveldt discusses on Russian television comments by Czech president Vaclav Klaus, agreeing that Klaus is probably more correct about the health of the euro than Eurozone politicians. (Aug. 31, 2011)
The U.S. Credit Downgrade
Johan van Overtveldt discusses on Russian television the U.S. credit downgrade by S&P, as well as the fate of the dollar and euro in the wake of this crisis. (Aug. 8, 2011)
Germany Will Be the One to "Turn Out the Light" on the Euro
Johan van Overtveldt discusses the Greek bailout package and the willingness of deep-pocketed Eurozone countries to continue propping up their debt-riddled neighbors. (Jul. 25, 2011)
Funeral for the Euro
Johan Van Overtveldt discusses on Russian television the financial state of the European Union and the possibilities and repercussions of the euro's potential demise. (Jun. 24, 2011)
The Wall Street Journal
"What is striking is that the question of staying with the euro was really something for nut cases; now it is openly discussed," says Johan Van Overtveldt, author of a book on the crisis called "The End of the Euro."- Christopher Rhoades
The concern, he says, is that divisions over the common currency in traditionally pro-euro countries like the Netherlands make additional big and painful solutions to the crisis harder to achieve, and an eventual unraveling of the common currency more likely.
Bookviews by Alan Caruba
Oct 28, 2011
It is a timely analysis and, while international economics and business may not seem the most exciting topic, the Belgium-based economic journalist has made it one with a highly readable history of how and why the European Union came into being as a response to World War Two and the threat of Soviet domination.- Alan Caruba
As the Belgian editor-in-chief of a leading news weekly Johan Van Overtveldt argues in his new book The End of the Euro: "Before the euro, the German corporate sector had to invest, push productivity, and innovate constantly to compete with companies in countries that regularly devalued their currencies." The unified currency changed that, much to the satisfaction of Germany's powerful industrial lobby, which still loves the euro for this very reason.- Paul Hockenos
Jan 19, 2012
Midwest Book Review
With financial crisis sweeping the world, the economic experiment of the Euro has its future in doubt. "The End of the Euro: The Uneasy Future of the European Union" is a study and discussion from famed economic journalist Johan Van Overtveldt as he discusses the united currency of the European Union, as he argues that the Euro is doomed to fail, stating that a multi-national currency proves too unstable, since no one government claims governance over the bill. Pointing to the many challenges and concerns that remain unanswered, and the impact of the world economic crisis. "The End of the Euro" is an excellent addition to community and college economic studies library collections.
[The Greek protest] is the latest manifestation of widespread social upheaval as Europe braces for the coming winter of discontent. Whether a glorious summer follows – or merely more anger and economic dislocation – is anyone's guess. But if you want to make yours an educated guess, rather than the uninformed speculation that fuels talk radio and tabloid journalism, do yourself a favor and read Johan Van Overtveldt's The End of the Euro: The Uneasy Future of the European Union.- James Brodderick
The End of the Euro is a must for all those wondering whether the euro is heading for abyss or salvation. It succinctly analyses the causes of the euro crisis and describes yet unthinkable scenario's in which Germany is the battleground. Read history while it is unfolding.- Derk Jan Eppink, Member of the Economic Monetary Committee of the European Parliament
Johan Van Overtveldt provides comprehensive documentation showing that the political dithering so apparent in the most recent euro crisis has in fact been the hallmark of the euro project from the start. His analysis of the consequences for the euro project is compelling. Hopefully politicians will read this book before they try to put the European project back together.- Anil Kashyap, Edward Eagle Brown Professor of Economics and Finance, The University of Chicago Booth School of Business
Johan Van Overtveldt's account is essential reading for anyone wishing to grasp the root causes of the eurozone crisis. Using politicians' denials and disregard for the economic signs as a backdrop, Van Overtveldt persuasively demonstrates how, fundamentally, the eurozone crisis is not about speculators or even sovereign debt – but about inherent flaws in the Single Currency itself. Looking ahead, his prediction is as bold as it is pertinent: unless the euro replicates the stability of the D-mark, it will be Germany that finally turns out the lights on the single Currency.- Mats Persson, director of the London-based think tank Open Europe
A whole generation of europeans has found comfort in the idea that economic cooperation has overruled the pull of power politics and even some basic laws of economics. This book forcefully squashes that illusion. A must-read!- Jonathan Holslag, research fellow at the Brussels Free University
Trouble is brewing for Italy, as it edges closer to becoming the fourth European country to need a bailout. The country's debt totals 1.88 trillion euros and is continuing to rise.
Italy's debt is surging past earnings, raising fears over whether Italian banks can pass EU stress tests, and that is forcing up borrowing costs....
Johan Van Overtveldt, editor-in-chief of a Belgium business magazine Trends, explained Italy's financial problems might put the economic crisis on a new scale.
Johan van Overtveldt on the Italian Debt Crisis
-Russian Television Jul 11, 2011