In another life, perhaps, Roderick Chalmers might consider taking up a university professorship.

I heard him speak on Thursday at the Bank of Valletta annual general meeting and he had also spoken in much the same terms when he presented the BOV annual results to the media at the end of October.

Whenever he analyses what happened in the big world, he is lucid, clear and comprehensive. Instead of the obfuscation one gets many times on such a subject as the world economy, he links different events together, he traces causes and effects, he gives the overarching view rather than get waylaid by single issues or events.

The BOV shareholders heard him out in appreciative silence. I cannot emulate him in his clarity and his grasp of the issues.

Mr Chalmers summarized the year that is about to end as ‘The Year of the Aftermath’. Just as earthquakes have their after-shocks, so too the huge crisis of 2008, which began with the sub-prime crisis in the US and reached world flash point on 14 September with the Lehman Brothers collapse, moved from banks to countries in the Year of the Aftermath.

The crux of the matter came in April when the full extent of the crisis in Ireland was known. Europe sluggishly came together and patched up a rescue operation along with the IMF. But the markets had noted Europe’s unsteady hand at the tiller and soon Ireland was under attack.

While the problem in Greece had been long-term government delinquency and fudging of statistics, coupled with an unsustainable lifestyle and a general lack of tax revenue collection, the problem in Ireland regarded the banks that the government, right at the beginning of the crisis, had declared to be backed by the government. It then turned out that the problems in the Irish banking system were far bigger than what the government finances could shoulder, but on the other hand the state of affairs here was too big to be allowed to go under. The main banks of Europe were involved in the easy banking of Ireland and its default would have brought many banks in Germany and France to the brink of collapse.

So once again, Europe decided to plough more money into the system to stave off a continental domino collapse.

Then it was the turn of Portugal to feel the heat. And maybe Spain as well. And had Berlusconi lost the confidence vote on Tuesday, there’s no saying what would have happened to the Italian deeply-indebted economy.

Meanwhile, the continent has now really become aware of the huge deficiencies when the euro was created. In part, what has happened was that when the two biggest economies decided to infringe the deficit ceiling, no one did anything to stop them. So the other delinquent countries jumped on the bandwagon and we all lived in dreamland where no country would be allowed to default, whatever that country’s faults.

For a time, serious and highbrow professors and opinion writers speculated that the days of the euro were numbered. Alternatively, they toyed with the idea that countries such as Greece at one end of the spectrum and Germany at the other end, could be allowed to leave the euro and revert back to the drachma or the Deutschemark.

Then they realised that, apart from other considerations, a country in a weakened position would be completely wiped out if it declared it was exiting the euro. For starters, such a decision would start a massive run on the country’s banks, as people would realise that the ‘new’ national currency would have to depreciate against the euro. Plus the massive and intractable problems to revert back to the national currency. Everything would go in reverse and would have to be done quickly; there would be none of the phased conversion to the euro.

So those who are in the euro are destined to remain in it: there does not seem to be any exit possible, perhaps not even for mighty Germany.

Instead of the ‘Lasciate ogni speranza voi c’entrate’(Abandon all hope you who enter here) this could become Europe’s safety net. For the rather short history of the EU has been that at every juncture, at every crisis, the European nations that make up Europe have, instead of disintegrating, come even closer together.

The founder nations came together to put peace on a more permanent basis, but only succeeded in creating a steel and coal entity. Some years later, that became the European Economic Community (EEC), then that became the EU, developed a fledging single market, which needed to have a single currency.

But there can be no real single currency – this is what the current crisis is teaching us – without an underlying stronger measure of coordination, and perhaps even coordination will not be enough.

There are still doubts galore – the Germans do not want to hear of pan-European bonds, people say the markets are not on the attack just because the bond managers are off to Switzerland to ski and, come January, the attack will be resumed.

At last week’s European Council, the heads of government agreed in principle to set up a permanent mechanism to safeguard the financial stability of the euro area, the European Stability Mechanism, and to do this without any big change in the treaties that would require a popular referendum, which given past experience, would undoubtedly be lost.

There is still an outside chance that a challenge is made to the German Constitutional Court and that this finds the ESM to be against the German Constitution or that it detracts from German sovereignty. Equally, some countries may decide that even the watered-down treaty changes require a referendum. Or the markets may decide that the ESM is a very weak bulwark and choose to attack it at its inception.

This has been the Year of the Aftermath, Mr Chalmers said, but it is too early to see whether next year we will see an aftermath of the aftermath.

The crucial country to watch is Germany: has it really gone off Europe, as (Luxembourg PM) Juncker claimed, or will it be proved right to have resisted further top-heavy integration insisting on the contrary on more austerity measures just as it did in the past years? Or will the coming times show us that too much austerity will kill off any prospects of growth and lead to more social unrest than we are already seeing on the streets of Ireland, Rome, London, etc?

People somewhat facilely point at the US dollar, forgetting it took 200 years for the dollar to get where it is today, besides which America is a federal state which the EU is not, nor does it look like becoming one. Not that today’s state of the US economy is anything to sing and dance about.

The year following the Year of the Aftermath can still see the continent’s economy slip back into a double-dip recession. There are still huge debts to be rolled over, and riots in the streets can become the order of the day. As we begin the second decade of the new millennium, the imponderables outweigh by far the few certainties.

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