Much has been said and written about the rise and ‘imminent fall’ of the euro, as well as about the policies adopted trying to save it. But often the comments have come from either academics or politicians, sometimes from people with aspirations in both realms. In ‘The Fall of the Euro, Reinventing the Eurozone and the Future of Global Investing’, the topic gets tackled by a currency specialist; Jens Nordvig, the global head of currency strategy at investment firm Nomura Securities.
Nordvig, a Danish-born economist, takes the reader on an abbreviated journey through the euro’s inception, to the financial crisis, and toward possible future scenario’s. He holds no punches in pointing out the design flaws of the currency.
Throughout much of the book, there are hints of the language of the financial world, which form an interesting change in perspective. There is a short chapter on ‘Market Implications’ of the exit of various eurozone members, for example, which reads like an investment guide. In the case of an exit by a weaker economy, you would want to short the government bonds, Nordvig advises, whereas a French exit could even lead to a French stock rally, albeit with heavy downside currency risks.
Reflectively, Nordvig suggests more transparency on the part of policy makers, as Europe stands on the fork in the road to either more or less integration. Should a solid mandate emerge, a type of mini-Marshall Plan based on bilateral ad hoc transfers from stronger to weaker states may play a role in turning around growth dynamics and political sentiment alike. Policy from the ECB should become more proactive, as inflation is already slipping below target.