BBC News
November 10, 2011
Strange but true: the euro is worth almost as much today as it was a month ago, despite all the dramas in Greece and Italy. It's actually about 3% up against the dollar since the start of the year.
You might see that as a vote of confidence, that somehow the single currency will get through this intact. You'd be wrong.
In fact, anyone who thinks that there will still be 17 members in the eurozone in a few years' time should be expecting the value of the currency to go down. Ironically, it's only if you think the eurozone might be about to break apart that it makes good sense to buy.
You might think I've gone entirely mad. But think about it. Within the eurozone, the only remotely plausible recovery path for countries like Greece or Spain involves a much weaker exchange rate - and, incidentally, higher inflation in Germany. (See this past blog for more.)
This is not really negotiable: if there is no path to recovery for these countries, either Germany has to bail them out indefinitely or the eurozone breaks apart.
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