The short answer, when it comes to eurozone adjustment post-crisis, is No. David Mackie and team at JP Morgan reckon we are maybe halfway there.
The bank has a fresh tome out presenting the progress so far as a set of journeys for each EZ member — covering sovereign deleveraging, competitiveness adjustments, household deleveraging, bank deleveraging, structural reform, and national-level political reform.
As you’d imagine, the results vary somewhat. So here’s series of travel updates in chart form. Click to enlarge.
Where does this take us? Mackie and co acknowledge that it’s rather depressing to think that after three years of pain, the eurozone as a whole is only halfway towards where Germany wants it to be. But then ongoing adjustment does not necessarily mean ongoing recession. And conditions might change in other respects…
The other trigger of a shift to a new narrative would be if social dislocation in the Euro area were judged to have passed some form of tipping point. At present this appears unlikely, but it is possible that reform fatigue could lead to i) the collapse of several reform minded governments in the European south, ii) a collapse in support for the Euro or the EU, iii) an outright electoral victory for radical anti-European parties somewhere in the region, or iv) the effective ungovernability of some Member States once social costs (particularly unemployment) pass a particular level. None of these developments look likely at the present time. But, the longer-term picture (beyond the next 18 months) is hard to predict, and a more pronounced backlash to the current approach to crisis management cannot be excluded.
Much more on this in the usual place.