Iceventure received a couple of questions over the summer concerning the analysis of the Euro crisis and the coverage of Greece.
In particular, three critiques have been formulated:
a) Why continue to keep the Euro crisis on the radar as even the "rebellious" Greek Prime Minister Tsipras committed on the mainstream Euro politics and reform agenda and all have only to work on agreed solutions?
b) Why such an appealingly tough stance on Germany as it is one of the best performing countries in the Eurozone especially with the start-up revolution finally also taking place here?
c) Why combining the Euro crisis with innovation and start-ups?
This post is only providing short answers as we are preparing, based on business intelligence work for customers, an updated analysis on the Euro crisis after the new Greek agreement.
Still I deem it important to provide some general comments prior, as we find the main thesis of a major structural change more and more confirmed.
Greece has its part, but is only a puzzle piece in the Euro crisis
First, even with this summer's Greek agreement I do not find any of the Euro issues as a currency area fixed. It is still a dysfunctional currency area with the ECB taking over a political role and a reform debate towards federalism starting only now.
This is the second dominating issue and from market view and realities years away in terms of speed of crucial reforms (as outlined here). Albeit Greece has its role and one can illustrate many Eurozone issues exemplarily, the bigger picture did not change. This issue will stay on the table even with a Grexit which likelihood did not significantly change with the new agreement.
In the meantime, it is interesting to use OCA theory for analysis and compare the Eurozone to the U.S., but we should treat the Euro as it is without the reforms: It is a fixed currency regime either turning into a currency area or falling apart.
Then, as I continue to argue, we deal not primarily with a currency crisis, but with a profound government debt and banking crisis that is amplified in an ill constructed currency area.