Europe has a Plan A, whereby each country would reform its economy, recapitalize its banks, and balance its budget. But Plan A is not working: its intended participants, most notably France, are rejecting it, and there is an emerging southern European consensus that austerity is not the solution.
Greece’s recent election has put it in the anti-austerity vanguard. Italy and Spain (which does not have enough money to bail out its banking system), have similarly called for an end to austerity. All have lost access to the bond market, and Portugal is so far beyond hope that its sovereign debt is trading for cents on the euro.
There is no well-thought-out plan for the orderly exit of the eurozone’s insolvent countries. There are no safeguards, no plans, no road map — nothing. The Maastricht Treaty, like the United States Constitution, did not provide for an exit mechanism. So, instead of realism and emergency planning, we get denial and more happy talk. But, just because something is “unthinkable” doesn’t mean that it can’t happen.
http://www.thestar.com/opinion/editorialopinion/article/1208703--europe-s-economic-crisis-is-going-global
Do you think the politicians are equal to the task? Me neither.
Another take:
Greece’s recent election has put it in the anti-austerity vanguard. Italy and Spain (which does not have enough money to bail out its banking system), have similarly called for an end to austerity. All have lost access to the bond market, and Portugal is so far beyond hope that its sovereign debt is trading for cents on the euro.
There is no well-thought-out plan for the orderly exit of the eurozone’s insolvent countries. There are no safeguards, no plans, no road map — nothing. The Maastricht Treaty, like the United States Constitution, did not provide for an exit mechanism. So, instead of realism and emergency planning, we get denial and more happy talk. But, just because something is “unthinkable” doesn’t mean that it can’t happen.
http://www.thestar.com/opinion/editorialopinion/article/1208703--europe-s-economic-crisis-is-going-global
Do you think the politicians are equal to the task? Me neither.
Another take:
The problems of Greece, Ireland and Portugal have spread to Spain, the fourth-largest economy in the euro area. Italy is probably next. The other members of the currency union can’t afford to bail them all out. Further loans will serve only to exacerbate the fundamental problem of too much debt and add to the growing enmity between the strong northern tier and its wards to the south. Without healthy economic growth -- and Europe is now back in a recession -- multiple countries will have to restructure their sovereign debts. Greece’s agonizing two-year restructuring experience suggests that doing several more would be extraordinarily difficult, if not impossible.
Brace yourself folks.
No comments:
Post a Comment