Caroline Ritchie: Euro drama to reach its climax

Too hard to ignore Europe this week. Between the writing and printing of this column, something will happen. It better be something good. I have a fridge magnet with an old digger wearing a cheese-cutter cap shouting "Don't Act Dumb! We Have World Leaders For That!" Every time I see it I think, crikey, I sure hope they're all on the same page over there.

The trouble is that they are not on the same page over there, they are a deeply divided continent. Cuffed by the same currency, yes, and with one of the most interwoven banking systems in the world.

But they are not getting on. Seventeen countries use the euro but there are 27 countries in the European Union.

They are all directly and indirectly affected by each other's goings-on. During expansionary years the savvy make good, the un-savvy do all right and every man just goes on his merry way. Then things turn and the fun turns to fights as the top dogs defend their castles whilst the unfortunates beg at the gates.

It is like a giant Coronation Street. Everyone's stuck in the same district, someone's lot is always better than someone else's and jealousy and back-stabbing reign supreme.

Big old Europe is suffering a serious case of small-town syndrome.

You see the problem.

If the euro explodes, it will take down with it countries that specifically withheld from joining the single currency.

And they don't like it one bit. David Cameron and Nicolas Sarkozy are squabbling already, before the most important European Union summit in years has even started. Britain doesn't use the euro, but the City of London is inextricably tied to it and its member states nonetheless.

The risks are huge for England. The risks are huge for all of us, actually.

Talks of a European financial transactions tax to recapitalise everything will leave London shaking in its boots. Big private banks are reporting they would be able to trade a "new" currency within days.

There are rumours of the second coming of the Deutsche mark.

The European Central Bank has all but canned any hope of mass bailouts and money printing, saying it is not in the spirit of things, and essentially if you read any British newspaper you just want to slit your wrists.

Of course, if every single news source is reporting that the euro will collapse and the banks will fail and that the politicians are sticking pins in each other's voodoo dolls, then most experienced skeptics will say there's a good chance none of it will happen at all.

Phew, another global crisis narrowly avoided, and we can all go back to tea and biscuits and watching the telly.

By the time this is inked I surely hope so.

Caroline Ritchie is an authorised financial adviser with Forsyth Barr in Napier.

She can be contacted on 0800 367 227 or caroline.ritchie@forsythbarr.co.nz.

This column is general in nature and should not be regarded as personalised investment advice. Disclosure statements are available on request and free of charge.