2015 hasn't got off to the best of starts for the euro.
This morning the single currency hit a nine-year low against the US dollar. One euro will now buy you less than $1.20. A mere six months ago it was closer to $1.40.
Thus far, since the financial crisis erupted in 2008, one country has been at the heart of every single major eurozone panic.
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So no prizes for guessing who's causing all the worry this time around.
Greece
Greece it's dj vu all over again
Late last year, Greece's current prime minister, Antonis Samaras, called for a presidential election. It was a gamble designed to shore up his government. It didn't pay off. On 29 December, after three rounds of voting, Greece failed to elect a president.
That means we're going to see an early general election on 25 January. And the big worry is that Syriza a far-left populist party is going to win.
Leader Alexis Tsipras says he wants to keep Greece in the euro (which is a shift from the last time Greece had an election in 2012). But he's also keen to ditch austerity measures.
That's a problem, because Greece's bailout by the rest of the eurozone was conditional on those measures being pushed through. In short, he wants to have his cake and eat it as well.
The Germans of course, wouldn't be too happy about that. (To be fair, most of the eurozone countries wouldn't be happy about it, but the Germans are the key ones for our purposes).
In fact, a report in major German magazineDer Spiegel over the weekend suggested that Angela Merkel was ready to tell the Greeks to sling their collective hooks if it came to it.
That report has been disputed by Merkel's government. But to paraphrase the immortal words of Mandy Rice-Davies: "Well, they would say that, wouldn't they?"
Anyway, the upshot is that everyone is worrying that Greece might walk, or be shoved, out of the eurozone the dreaded Grexit'.
If this sounds familiar, that's because it is. Back in May 2012, Greece had an election. At that point, a vote for Syriza was seen as a vote to leave the euro. Investors were panicking. If Greece left the euro, who'd be left holding the bag? Which banks held Greek debt? Would it be Lehman Brothers all over again?
In any event, it didn't happen. The Greeks voted for the devil they knew. They opted to stick with the status quo, however hard it was. You could see why. Ditching the euro might have been sensible in the long run, but it would have been scary. Anyone with savings, or a business dependent on importing goods, would have suffered a great deal in the short run from any return to the drachma.
So is a Grexit any more likely now? And what would it mean?
Why this time a Grexit is different from 2012
I'll admit that back in 2012, my gut feeling was that Greece would vote for Syriza. In the ensuing stand-off, Germany would agree to allow the European Central Bank (ECB) to do full-blown quantitative easing (QE) but only after Greece had been kicked out.
That way, Germany could show its voters (and the other peripheral' nations) that intransigence had consequences, while loyalty had its rewards. There would be no domino effect' with Portugal, Spain and Italy following Greece because QE would reassure both voters and investors that things would be OK.
As it happened, Greece stayed with the eurozone. As a result, Mario Draghi at the ECB only had to make a vague promise about QE, rather than actually going ahead with it, for all to be well.
Now it seems that we're back where we started. But there are some clear differences this time around that investors should be very aware of.
Firstly, this is all about Greece now. This is not about a potential domino effect. The other peripheral' countries have made their choices clear. Portugal is not going to walk out of the euro just because Greece does. Anti-euro parties might be gaining ground in plenty of countries, but, as of now, they are not in a position to force their countries out of the single currency imminently.
Secondly, the eurozone banking system may not be remotely healthy, but it's in a better state than it was a few years ago, and investors have more confidence in the ECB acting as lender of last resort. Whether this faith is justified remains to be seen, but it's hard to believe that a Grexit' wouldn't give Draghi the green light to go ahead and print a big pile of money to buy other eurozone government debt.
What that means for investors is pretty clear. At this point, Greece is as it was back in 2012 a bit of a high-risk punt. If it leaves the eurozone, you could see capital controls imposed and you could lose a lot of money. Alternatively, if it stays you could see a massive rebound and make a lot of money.
But if you've been keeping an eye out for opportunities to buy into other eurozone markets, then now (or during the next month) could be a good time to do it.
Why? A eurozone without Greece is a stronger eurozone. But it'll also be a eurozone with added QE because it won't let Greece walk without firing up the printing presses. That's good news for stocks.
And if Greece stays we still get a weaker euro, and there's every chance that QE will start this year anyway. You can take a look at my New Year's Day piece for one very feasible scenario from SaxoBank as to how QE could unfold in Europe.
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QE in Europe also features highly on the list of things our experts are predicting for 2015. You can read all about it, and the rest of their views, in the next issue of MoneyWeek magazine, out on Friday.
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