Spain
Europe: Is it time to break up this marriage?
September 12, 2012: 5:00 AM ETFrom up close, it looks like the 'poorer' nations could do just fine without a single currency.
By Erin Burnett, contributor
FORTUNE -- This summer trips to Europe opened my eyes to something: There's a lack of passion in Europe for keeping the euro. Yes, the pain of a breakup would be severe. But many of the poorer southerners of Europe don't seem to feel that they need "Europe" anymore.
That, at least, is the way it appeared to me after spending time recently in Malta, Italy, Switzerland, Belgium -- and even the Berlin airport. These Europeans are proud of being Maltese and Sicilian. Proud of being citizens of greater Europe? Not so much.
Sure, the euro has helped the poorer Southern European nations. Take Sicily: When Brussels mandated that European Union countries get 20% of their power from green sources, entrepreneurs -- and the Mafia -- jumped at the opportunity. Press reports refer to the Sicilian Mafia as "lords of the wind" after bosses took a piece of the more than $5.6 billion worth of green-related subsidies that Brussels doles out (some of those subsidies may fall victim to the financial crisis). As a result of the temporary largesse, Sicily is Italy's top producer of wind power. Hey, where there's a subsidy, there's a taker.
MORE: Two legends wrestle over the euro's future
Still, the people I crossed paths with didn't seem to think their new wind farms, visitor centers at historic sites, and motorways are annuities. They saw them more as a lottery: something nice to win once, but that's about it. The attitude was consistent: "Okay, this is over. Who cares? I'll go back to my life now, thanks." In the windswept hill town of Agira, Greece, one man said, "My family is my life -- that's it." In Palermo, the answer to my question "Would it be bad if the euro died?" from one thirtysomething man was even more direct: "No. Why would it be bad for us?" He asked it in a challenging way, making it clear, politely, that in his view I was biased even to ask the question.
I believe, as do the southerners, that the biggest beneficiaries of "Europe" as a statelike concept remain Germany and France. Without the euro, they're No. 4 and No. 5, respectively, on the list of the world's biggest economies. With it, they're No. 1 -- triple the size of China and a couple trillion dollars in GDP ahead of the U.S. The euro keeps Europe's most powerful economies relevant -- in league with the juggernauts.
So they need the much-maligned South -- including Italy (world economy rank: No. 8) and Spain (world economy rank: No. 12).
If the European Union broke up, the South would suffer from "Drachmageddon": That's how Pimco's Tony Crescenzi describes the "exceedingly" difficult process of paying back debts that used to be in euros in drachmas, liras, or pesetas.
MORE: Why Germany deserves to be knocked off its perch
But Europe's South is more economically resilient than you might think. Take Mazara del Vallo, home to Sicily's biggest fish market. Sicily's fishing fleet is Italy's biggest. The biggest export destination for Sicily? Not Euro-pals France or Germany, but Japan. If Italy left the euro, Japan would still buy Sicilian tuna if Sicilian tuna was the best. And closer to home, fishermen this summer were selling to men they knew, sealing the deal with a handshake. It's an economy that prides itself on being locally driven. They don't need the Germans for that.
Right now, Malta to me still feels more like Jerusalem or Tunis than Berlin. Parts of Sicily? More like North Africa than Milan. A tighter European Union, which is needed for the euro to survive, would slowly but inevitably erase many of those cultural differences. But there is another way. After all, 12 years ago there were 17 separate currencies. That worked fine. The financial pain of breaking up this European marriage would hurt. But when it comes to daily life, I'm betting that Europe can handle it and move on.
This story is from the September 24, 2012 issue of Fortune.
-
Reinventing Spain's economy
The nation has a big productivity problem compared with its trading partners.
By Pankaj Ghemawat and Stijn Vanormelingen
FORTUNE -- As Europe's leaders attend one emergency meeting after another, the political high drama shouldn't make us lose sight of the fact that if the debt crisis is to be solved, Southern European companies need to change how they compete. Nowhere is that more evident than in Spain, whose elites fret over MORE
Jul 10, 2012 5:00 AM ET -
Wall Street's hidden Europe risk
Big banks are betting that Europe's largest nations will avert crisis.
Fortune - Wall Street firms have been trying to stay one step ahead of the European crisis. That might not be far enough.
Earlier this year, a number of U.S. banks disclosed that they had significantly cut their exposure to Europe's most troubled economies. That was welcome news at a time when the Euro crisis appeared to be heating up again. MORE
Stephen Gandel, senior editor - Jun 12, 2012 6:00 AM ET -
Bank bailout is no cure for Spain's pain
Spain's bank bailout merely transfers more debt to its weak government balance sheet and it sets the stage for a full sovereign bailout.
By Cyrus Sanati
FORTUNE -- Investors initially cheered the news that Spain reached a deal for a 100 billion euro bank bailout, but that enthusiasm may not last once the details are digested. The deal, concocted in Madrid and Brussels over the weekend, amounts to a kind of MORE
Jun 11, 2012 10:27 AM ET -
Spain should let its small banks fail
Cobbling a bunch of zombie banks together has created a monster that the Spanish government cannot afford to kill. More consolidation isn't the answer.
By Cyrus Sanati
FORTUNE -- Consolidation is no panacea for Spain's banking woes. The announcement this week of yet another banking merger in Spain has done little to restore investor confidence in the country's shattered banking sector. The Spanish government and the European Central Bank will ultimately MORE
May 31, 2012 12:13 PM ETPosted in: Spain -
Banco Santander's Emilio Botín takes on the world
Europe's foxiest banker has built a financial powerhouse by acquiring prominent foreign banks for bargain prices.
By Charles P. Wallace, contributor
FORTUNE -- The view from Banco Santander's flying-saucer-shaped headquarters, sitting atop a sprawling 340-acre campus outside Madrid, is breathtaking. You can see the bank's championship 18-hole golf course, a nursery for 550 children, and a grove of 1,000-year-old olive trees transplanted from Sicily at a reported cost of $50,000 a pop. MORE
Mar 23, 2012 5:00 AM ETPosted in: Ana Patricia Botín, Banco Santander, Banking, banks, Emilio Botín, european banks, European debt crisis, Spain -
Spain's big fix will enrage many workers
Exclusive: Spain's economy minister Luis de Guindos shares the details of a reform package that could help get the country's economy back on track, but it will not go over well with many workers.
By Charles Wallace, contributor
FORTUNE -- Faced with the highest unemployment in the developed world and an economy skidding into a double dip recession, Spain is about to embark on a series of Reagan-style financial and labor market MORE
Feb 2, 2012 5:00 AM ET -
Europe's ticking time bomb: Credit default swaps
In the midst of the eurozone meltdown, a new crisis has gone unnoticed: a shaky derivatives market.
By Charles P. Wallace, contributor
FORTUNE -- Warren Buffett once famously described credit default swaps as "financial weapons of mass destruction." Now these complex insurance policies are once again posing a menace to America's too-big-to-fail banks. The last time around, CDS on U.S. subprime mortgage bonds nearly brought down insurer AIG (AIG), requiring an $85 MORE
Jan 4, 2012 5:00 AM ETPosted in: credit default swaps, European debt crisis, Eurozone, Greece, italy, Macro, Portugal, Spain -
In Spain, new leadership, same problems
Spain is in no immediate danger of going bust. But as its economy shrinks and its banks start to crumble, Spain will look more like its spendthrift southern European neighbor, Greece.
By Cyrus Sanati, contributor
FORTUNE -- Spaniards voted in a new conservative government yesterday on hopes that a change at the top could help save the country from its economic woes. But it's unclear if the country's new leaders can do MORE
Nov 21, 2011 10:50 AM ET -
Will Europe come tumbling down?
The debt crisis that started in Greece now threatens to topple the whole continent -- and kill the weak recovery in the U.S. Inside the race against the clock to fix the euro economy.
FORTUNE -- At first glance, Yiannis Boutaris would seem to be an unlikely free-market reformer. The 69-year-old mayor of Thessaloniki, Greece's second-largest city, has tattoos decorating his forearms and knuckles, short-cropped white hair, and a face creased MORE
Shawn Tully, senior editor-at-large - Aug 19, 2011 5:00 AM ET
