More than 50% odds for the Euro to disappear before year end... Really??!!

At least that's what Jacques Attali told a French newspaper on Nov. 25^th 2011.

On paper, the guy has been the French macro-economics Wonderkid for a few decades: X-Mines, Sciences Po and ENA graduate (for the vast majority of the world population who don't care about the French education system, it's a bit like having a resume combining MIT and Cal Tech, plus Harvard Kennedy School of Government and a Stanford Political Science major, first in class all the way long...), he also scored an economics Phd, then went on becoming advisor to the French President Mitterrand before heading the European Bank for Reconstruction and Development, and more recently created the micro-finance group PlaNet Finance (well, that last project is cool, so check it out when you get a chance: http://www.planetfinancegroup.org/EN/). Don't mean to add up, but he is also a famous writer and symphonic orchestra conductor...

The issue is that the guy is not “street smart”. More precisely, he tends to live in a theoretical bubble that he will call the “real world”. For those who a want a proof and speak French, please read his book “La crise, et après?” (“The crisis, and then what?”), where he gives his views on the 2008 / 2009 credit crisis and what we should do next to rebuild the world economy and financial system. There, he pulls out a lot of excellent macro-economy conceptual tools, but shows a clear lack of concrete investment banking industry experience and hands-on knowledge about financial derivatives.

And the exact same thing happened a few days ago. After going through a set of sovereign debt crisis management measures which look good on paper (a real program of bonds buy-backs by the ECB, drastic European agreements on public deficit management, in depth reform of the ECB to give it access to tax income plus the ability to issue Euro-bonds), he reveals the output of some theoretical model known to him only: there are more than 50% odds for the Euro to disappear before year end...

Mmm... How to say that... I agree that the Euro zone is in trouble, that European leaders are slow to find a way out and show us the end of the tunnel, and I am even OK to consider that there is a risk for the Euro system to break down. But 50% plus odds on a break down before the end of 2011??!! Jacques, to be honest, I don't even want to have an analytical debate with you about it, you're too smart for me. But I'm more than happy to book you the bet on that one...