The two-speed Euro has already been realized. Through speculation.

Analyzing yesterdays Financial Times article, titled: “Economics will catch up with the euro” (published yesterday).

A few days ago I was asking whether the “Cyprus Affair” was sui generis, as Germans said. But Dijsselbloem’s “slips” were very eloquent and re-incorporated the “Cyprus Affair” back into the system. I was wondering the other day what would be the material manifestation of the new bifurcation within the Euro, and was speculating for a two-speed Eurozone. But I was wondering how that would be actually possible, i.e. would it simply be the Euro with applied restrictions of capital movement? But now I realize that the bifurcation does not need this to happen concretely, in the sense of “institutionally”. The “two-speed” Eurozone is already here, and the bifurcation is realized thus: on the one hand, we have the Eurozone, and on the other hand we have the concrete case of Cyprus PLUS the speculation and fear that already grasped the other Southern European Countries because Cyprus is not sui generis but a “framework”, as Dijsselbloem said. My point is: speculation is part of this financial reality, and insofar as speculation is real and can mobilize acts and movements (or restrictions) of capital, we already have the bifurcation: a two-speed Eurozone. And this will soon require action, a kind of resolution. The question is how will this be resolved? But this still depends on how much speculation there is and how much fear it amounts to. The more the speculation, the more “real” the bifurcation and the need for a resolution become. (But because speculation varies, if it retreats then the bifurcation recedes; and vice versa).

To recap: The dialectical pattern is obvious, in my opinion. We are living through another European bifurcation, in continuation with the history of the European Union. From EU we went to –> Eurozone & Non-Eurozone. Now, the Eurozone is further breaking up into –> Northern & Southern. The essence is not the same. The two bifurcations are different. A resolution will soon be found.



About Christos Hadjioannou
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