Everyone as heard of the expression ‘living from day to day’, never really knowing what will happen the next day, or in the next week. Well thats very much how the euro feels at the moment, as the euro is
doing a kind of high wire balancing stunt. Will it survive, or will it fall?
There is alot of prediction that the euro will collapse altogether, I don’t necessarily think that will be the outcome of the crisis, but I do believe that there is going to be a massive shock as the euro contracts into a smaller harder eurozone, and unloads some southern Meditereanean economies as just far too much of a heavy burden to carry anymore.
The focus of the euro crisis as now moved from Greece to Italy, different countries but with very similair problems. Italy like Greece had a decade in the ‘good times’ to reform and reduce the national debt, by reducing there large public sectors, combating tax evasion and corruption, and cutting the mountain of red tape to encourage more free enterprise and free up competition? Italy and Greece know how to flatter, avoid and evade any demands for reforms from outside forces like the IMF and ECB, they have both been doing this for years, decades. Now the game is up, and the ECB and IMF have lost patience with both countries for endless promises of reforms not honoured or kept.
Berlusconi promise to eventually resign will change nothing for Italy’s deep seated structural problems, just as the same applies to Greece’s Papandreou’s promised resignation. Politicans may come and go, but is is growth and competition that is needed in these countries economies, no more grand standing and political musical chairs? The north of Europe as lost patience with the south of Europe, that is the simple truth of the matter. You can help a friend out by writing a cheque, but what happens when the friend just expects more cash cheques, and looks like as if he as very little intention to pay any of the money back? Merkel knows this, as do the German tax payers, and they have had enough.
A widespread problem within southern EU economies is the rigid employment laws that discourage employers from taking on any new staff even if there business was expanding, together with a trade union mentality that is frozen in a 1970’s time warp resisting any form of change to out dated employment laws. Brussels and the EU elite are so obsessed with building the ‘new social Europe’ that they have forgotten we live in a global competitive world market. Asia is on the rise, while Europe navel gaze’s over EU treaty changes. Giving mothers and fathers lots of rights etc does not help the small employer who is left short handed when they take extended leave.
Barosso and VanRompuy need to wake up to the new world order if the euro is to survive? The euro is fast dropping down the scale of world currencies?