Roma, Italy News Release. Italy-based boutique brokerage, Aviva Capital, believes that the growing resentment towards the almost inevitable bailout of Greece by neighboring EU member states could cause fractures in the very fabric of the single currency.
Analysts at the firm suggest that aside from the political moral hazard of bailing out a country whose profligacy has sent its deficit over 130% of GDP, countries like Ireland who have imposed tough austerity measures to restore their economies to more sustainable levels will question the justification for their current economic pain.
Aviva Capital say that, although the European Commission has given Greece until March 16 to show that the measures it has announced are beginning to take effect, it is possible that should the country eventually need financial assistance, it is likely to come from the IMF rather than a taxpayer funded solution from other member states.
Aviva Capital said that monetary union is not viable without political union. While Europe remains comprised of separate sovereign states, its foundation will remain inherently unstable and this is at the heart of the current wave of fear surrounding the single currency.