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Europeans Have the Will to Defend the Euro

Adolfo Laurenti's Eurozone Tour

CHICAGO--(BUSINESS WIRE)-- In his October newsletter, Deputy Chief Economist Adolfo Laurenti takes us through his recent tour of major European countries that have adopted the single European currency. After visiting an ailing Spain and a stern Germany, he notes that financial conditions appear to have improved since the European Central Bank (ECB) promised to buy government bonds. As ECB President Mario Draghi said this past summer, we will "do whatever it takes to preserve the euro.”

As an economist, Adolfo Laurenti naturally wanted to test this resolve for himself. “My first stop was Madrid. Arriving at my hotel, I reached into my wallet to pay for the taxi ride from the airport and decided to gauge the euro’s strength myself. With my best poker face, I turned to the cab driver and asked: ‘Euros, or dollars?’ He looked back at me, maybe a little puzzled, but without particular hesitation, and answered ‘Euros.’”

It quickly became clear that Europeans are taking great pains (literally, in the case of austerity-driven countries in Southern Europe, like Greece, Italy and Spain). Laurenti says that Spain is finally tackling tough political issues, including the reform of notoriously inflexible labor markets. That means everything is on the table: “Contracts, layoffs, severance and wages. Nominal wages are actually falling in some sectors, in order to boost competitiveness.”

Our deputy chief economist cautions that this “structural reform is a process, a continuous effort to adjust to ever-changing economic circumstances, not a well-defined trajectory to a final, stable condition.” So despite setbacks, he reports that European passion to stick with integration is real. “Look at election results in the Netherlands and Greece to get a sense of how committed voters are to the European integration process. We should not underestimate the determination of governments and voters to succeed.”

For more, the October issue of Themes on the Global Markets, as well as archived issues, can be found at

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Source: Mesirow Financial