http://www.tdf-tours.com/ I was delighted when French President Sarkozy spoke of "determined co-ordinated action" to save the Euro zone from the Greek debt virus. And yet he provided no concrete plan. The markets responded to this wan response accordingly: the Euro dropped.
Spyns sells its Tour de France tours in US$ yet pays its expenses in Euros. We in the travel community are delighted with Greek implosion because it devalues the Euro. It's not that I have anything against that country, my former business partner was Greek, but the situation is finally exposing the myth that is European unity.
The European community consists of 27 member states however only two truly count: France and Germany. Anyone who has ever traveled with Spyns to France knows how much I love that country. I love the wine, the people, the cycling, and of course the Tour de France. I speak French fluently as do my children. However, the French are in love with la grandeur and have always longed for a US-style role in international affairs. France alone is not important enough to have such a role but they've found a convenient vehicle via the European Union.
Since 1945, the French have consistently invited Germany to dinner, yet always left the table once the bill was presented. Robbed of any military deterrent, post-war Germany has largely deferred to France to handle its international affairs. Unfortunately, the French have become a bit too confortable in taking initiatives, and writing checks, on Germany's behalf. Enter Greece.
I found it rather symbolic that the French and German heads of state walked astride the Greek Prime Minister while the little-known EU flunkies trailed behind. President Sarkozy loves the international stage because it reinforces French grandeur so of course he was front-and-center talking (endlessly) about his plan to save Europe...and (in his mind) the world. Chancellor Merkel blanched. She was rather vague because she faces strong domestic opposition to a Greek bailout. Even a member of her own coalition mused publicly that you don't hand an alcoholic a bottle of Schnapps. Germany is about to turn down the next French dinner invitation.
While the euro is a common currency shared by 27 nations, markets consider it a glorified Deutschmark - hence the euro's inexorable rise against the greenback. Money markets see Europe as France + Germany with relatively stable and prosperous economies. Few remembered that Spain, Portugal, Italy, and Greece also share the Euro. That is until a few weeks ago when Greece's deficit reached a staggering 13% of GDP. The markets woke up and smelled the bond spreads.
Here are my predictions: France (via Sarkozy) will continue to grandstand speaking about a common approach with little action; Germany (via Merkel) will retreat from any bailout because German voters are too pragmatic to extend more money to a country on the verge of bankruptcy; Greece will languish but like anyone who has declared bankruptcy will finally learn prudent financial management; the EU will hold another few summits (Spain gets the rotating presidency now and desperately needs a bailout as well) yet everyone will return to their respective capitals where domestic concerns far outweigh saving a few million Greeks on the periphery of Europe. I haven't mentioned the British as they are not part of European monetary union. Not surprisingly, the Brits say this is a continental issue.
As the Eurozone's largest exporters, every drop in the euro greatly benefits both France and Germany. Therein lies the true problem. My father always said, "Follow the money." While politicians speak of unity, every Eurozone finance minister knows the Euro is overvalued. They bemoan the souless traders attacking poor Greece yet everyone wanted this benefit: a devalued Euro. For every percentage drop in the Euro, a Spyns customer gets more wine during their Tour de France trip. So I daresay, "More Greek salad please!"
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