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What Euro Crisis?

The couple on the patio of Palmenhaus, a popular café in the Burggarten in Vienna, is clearly enjoying the unseasonal September sun. They are young, happy, and pregnant. “The baby is due in November,” the wife said to an American reporter at the next table. The husband and wife (they declined to give their names) spoke about life in Austria during the current financial crisis that, according to some observers, has hit Europe hard. “The euro crisis is not evident here,” the husband said. “We’re still linked to Germany so it doesn’t affect us so much. Not like Spain.”

She is the manager at an upscale design gallery. He’s a tourism consultant with government contracts. They make enough money to feel good about their future. But after a moment, they tell a different story. “The price of gas is impossibly high,” she said. “Real estate prices are getting out of control.” He added, “The price of certain staples is going up.”

Stories like this one are evident in many parts of Europe. Look around on a sunny day and everything seems the same. Cafés full, families and tourists enjoying a meal, children cavorting among the tables. Conversations in French, Russian, Italian, Spanish. Plenty of Americans, too. But talk to some locals and the reports are less rosy. Pick up a newspaper or watch TV and things appear worse. Phillip Inman, economics correspondent for the London-based Guardian, recently wrote, “Eurozone leaders are desperate to stay inside the [euro] currency zone.” To do that, they’ve advocated austerity measures (cutbacks in social services, wage declines and forcing repayment of bank and sovereign debts). Others wonder if such measures are not responsible for worsening the crisis. Still others suggest that maintaining the single currency system is not a good idea. While it is clear that the economic crisis has hit some countries and some sectors quite hard, the everyday lives of many Europeans has not changed very much.

When the euro was adopted as the single currency of the European Union in 1999, the world was a different place. The housing market hadn’t gone bust, and just about everyone, the United States included, was riding high on prosperity. The idea of a unified currency was embraced, in part, as a means to increase overall economic affluence by lowering the cost of financial transactions, facilitating trade, increasing travel and strengthening the role of Europe internationally. For a long time, it worked.

Enter the financial crisis of 2008. In December of that year, European Union leaders responded with a 200 billion euro stimulus plan to boost financial growth. As deficits in some countries began to climb, they were ordered to adopt measures to counteract deficits. In 2012, European debt crisis has grown worse with Spain and Greece falling deeper into financial holes. Current estimates for a euro rescue package, according to German periodical Der Spiegel, are at just under one trillion euros. Is the euro still a good idea? Is there European financial crisis? For a traveler to the Bodensee (known as Lake Constance in English), it is often hard to tell.

Maria runs the spa at the Hotel Traube am See. She has seen a drop in tourism over the past year, “and they don’t always tip like they used to.” But, overall, she has noticed little difference, “except what I hear in the news.”

A week later, in Cluj-Napoca, Romania, the same reporter looked for evidence of crisis in the former Soviet-ruled nation. One U.S. dollar buys three and a half of the local currency, the Ron, but prices for many things (like an apartment) are quoted in euros. The local news talks more about corruption than the European crisis. Still, its effects, if just as contradictory, are felt there, too. A pair of Italian businessmen downing after-lunch espressos at the five-star restaurant Baraca were overheard lamenting a drop in sales. “Our best business is in the United States,” they said. They sell pipes “for oil and gas.” Demand in Europe was significantly down. They hoped things would improve but were not expecting much from their current trip. “We are leaving tomorrow,” one said as he pocketed his credit card and handed the waiter a generous tip. FBN




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