Do eurozone leaders need to keep failing?
We are told that eurozone finance ministers meeting yesterday and today (with other EU ministers) in Brussels are keen to put the crisis in the single currency behind them.
Well, maybe. But you could argue that they shouldn't put it too far behind them. Why? Because across the eurozone, governments are pinning their recovery hopes on a weak euro. And in 2011, most analysts are expecting the euro to go up.
Arguably, the only way to stop the euro from strengthening, in the current global environment, would be for ministers to continue to mismanage the crisis. In other words, to support the real economy, they need to fail to put at least some of the markets' worries to rest.
Naturally, I am being a little facetious. But I have been struck by the number of city forecasters predicting that the euro will go up in 2011. Goldman Sachs, for example, is betting that one euro will be worth $1.50 by the end of this year.
The logic is not so much that Europe is strong - more that the dollar has to fall for the US current account deficit to come down. And of course, monetary policy is also on the side of the euro. Jean-Claude Trichet's remarks last week confirmed that the ECB is a lot closer to raising interest rates this year than the Federal Reserve.
You have to imagine the euro would have strengthened a long time ago, had it not been for Greece, Ireland and the rest. There was a relentless rise in the value of the euro against the dollar in the first years of the single currency, peaking just shy of $1.60 in the summer of 2008.
It fell sharply in the wake of the crisis, only to creep up again in 2009, when European investors were bullish, and no-one was paying much attention to what was going on in Athens - or Madrid.
By the end of November 2009, the euro was back up at $1.50. But then, the world discovered the PIIGS. Bad news for Greece, Ireland, Portugal, Spain and the rest, and anyone holding their government debt - good news for the eurozone's exporters, especially the German ones.
The longer eurozone policy makers fudged and delayed, the more competitive German exporters became. At the end of May 2010, the euro was down at $1.20.
Since then, the currency has been even more closely linked to ministers' ability to keep a grip. Amazingly, it was back at $1.40 at the end of the year, as traders briefly stopped worrying about Portugal and Spain. Then it slumped again - falling again, today, on fears that ministers would not make much headway on proposals to expand the eurozone's new bailout facility - the EFSF - and/or make it more nimble in response to market shocks.
I don't think that the eurozone's finance ministers are failing to resolve the crisis on purpose. It's not as if this is an easy problem to fix. And of course, a full-blown panic over Europe's sovereign debt would do far, far more damage to Europe's financial system and its economy than a rise in the value of the euro. And this degree of volatility in exchange rates does no-one any good - exporters least of all. Still, in this "race to the bottom" among the major currencies, Europe's knack for crisis mis-management may be the strongest weapon it has left.