Such a turmoil surrounds the Euro crisis that day after day we less and less understand whether the latest summit will put an end to the debate, and our concerns!
However, we rarely hear news from the reasons for which our heads of state are so worried. In fact he main problem is that they find themselves in such a pressure that they propose us short term and immediate solutions for a structural downfall of southern Europe, namely Greece, Portugal, Spain, Italy and, in some extend, France.
The Euro original sin comes in fact from diverging economies confronted with a single currency. On the one side, countries with structural deficits, that they can finance only with a recurse to the public debt. Thanks the Euro, borrowing money is easy and helps the governments avoid to implement painful and politically dangerous reforms, e.g reducing public subsidies to large parts of the population or cease to support outdated industries. In parallel, they simply forgot to implement the necessary measures to develop innovative industry, which is the main money maker of Northern Europe countries.
During the same years, countries like Germany, Finland, Sweden, Austria succeeded in reforming their economic and social systems, while maintaining a high-tech industry, at the price of some unpopular decisions, like German Chancellor, G. Schroeder, did in the mid-2000 when he subsequently lost the parliamentary elections.
Currently the level of debt in South Europe has become so high, that nobody believes that they will be able to pay back: they simply do not own the industrial basis able to generate enough added value, and therefore income, to make the states prepare budgets, which could include both the internal political constraints and the external debt. By internal political constraint I mean: pursue with a large and generous social policy and reimburse the debts.
The current crisis is firstly a crisis of confidence against the policies of some European countries, not a against the Euro by itself.
My only concern, at least for the time being, is that short term solution never solve a long term issue. That means that southern countries will have to address now the changes they have refused for many years... This, will be really painful for the populations!
The current crisis is firstly a crisis of confidence against the policies of some European countries, not a against the Euro by itself.
My only concern, at least for the time being, is that short term solution never solve a long term issue. That means that southern countries will have to address now the changes they have refused for many years... This, will be really painful for the populations!
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