If you remember back to the summer when everyone wanted to compromise to accommodate Greece except Angela Merkel. She stood firm, refused to give even an inch (or 2.5cm in the eurozone) and in the end Syriza gave way and the greek people accepted another austerity bailout and further cuts. Fast forward to yesterday and the Spanish general election. The result was that the anti austerity left and the far right (anti refugee?) parties actually took about 60% of the vote but none of these smaller parties are able to form a government.
What if Germany had given in the the Greek anti austerity agenda? We would have been looking at a Spain rejecting all the cuts and privations they have suffered under their EU bailouts since 2009, they Euro would have been pitched back into a crisis ten times the size of the greek Grexit summer.
What if Syriza had stuck to their threats and had left the Euro? If greece had simply left the euro, declared insolvency and written off its debt it is possible that Greece could at least to the outsider appear to be doing better outside the Euro than in. If you are printing your own money you can print as much as you want. No one else outside your country would touch it with a barge pole but how many greeks can afford to travel now anyway? But if they appeared to be doing better out of the Euro would be now be facing calls for Spain to leave too?
As it happens ense prevailed and Germany didn’t compromise and Syriza didn’t stick to its principles and th epay off for that is that Spain has just survived a massive test.
What this means to you, and the point of all this is that the Euro has quietly gained in value this week and that is going to make your skiing holiday in the new year that little bit more expensive, nearly 1% since Friday’s close of business but I would be very surprised if not significantly more by the end of the week.