Euro back in Davos focus as first ECB then Greece decides

By Simon Kennedy & Stefan Riecher

The euro-area economy is back in the cross-hairs of investors.

It?s a familiar place for the currency bloc, which spent the past five years struggling for growth, the faith of investors and even its very existence. The latest concerns, that failure to break political logjams dumps the region back into recession and crisis, are propelling the continent back up the worry list of investors, executives and policy makers heading to the World Economic Forum?s annual meeting in Davos.

A Greek election in six days may hand a slice of power to a party gunning to renegotiate the austerity on which the nation?s bailout is based, potentially serving as a preview for votes in Portugal and Spain and reviving talk of a euro exit.

Meantime, European Central Bank President Mario Draghi, the man who defused the turmoil in 2012, is trying to craft the cross-border consensus needed for full-blown quantitative easing as the threat of deflation hovers over the region and governments resist overtures to do more.

?The politics of Europe is so much more problematic even though the economics look better,? says Ian Bremmer, founder and president of the New York-based Eurasia Group. ?Everywhere you look politically, bottom up, inside out, outside in, Europe is bad this year.?

False Dawn

That?s a reversal of fortune from last year when Draghi was telling Davos delegates that he anticipated signs of a ?dramatic? improvement in his economy?s health, and German Finance Minister Wolfgang Schaeuble declared the crisis over.

For a sign of the renewed concern, look no further than the euro, which turned 16 years of age this month and is trading at its lowest in more than a decade against the dollar.

The...