Facts and Opinions...

theeconomist:

Tomorrow’s cover today Readers in Europe get their own striking cover this week. The euro is proving horribly costly, but a break-up would be even worse.

Europe and the euro-zone are in a perpetual crisis!! However, breaking up the Eurozone could be more painful in the long run (economically and politically). This article has many great points. However, I think it misses the only real solution and it includes an awful “solution” that I have heard over and over again.

There has to be serious consequences for the fiscally irresponsible countries in Europe!!!!! The article never mentions this. Overspending is what for the most part caused the mess (Ireland’s situation is different). The gentleman’s agreement will not work because the Southern European countries have never followed it. There has to be a European agency to monitor and penalize countries.

Germany should not be expected to increase domestic consumption. How can you penalize someone for their frugal nature? Does that seem to make any sense? The idea is German’s saves too much thus these savings go into other euro-countries to finance their deficits and consumer debt. This increased credit capacity leads to more German products being sold. First of all wouldn’t a more rational solution be don’t spend above your means so the Germans will not be able to lend to you. Then they will either have to get measly returns in their own country or they will be forced to spend it! But be warned. When they spend it, it will be on Chinese goods not Spanish. Remember that Germany is a great export nation because it produces superior products (trust me, my dad has experience with German engineering goods)!!!! Most Eurozone countries don’t (produce superior products)!

If the Eurozone gets disbanded it will be a huge step back for European economic and political integration. This will result in a slow decline of European influence and power on the world stage.  They have had a good run (a few hundred years) so it shouldn’t be that hard, right? Unfortunately, I love Europe! When it comes to social issues no geographic location exemplifies my views as well as Europe does! I do not wan’t to see an icon of modern liberalism (except for the burkha and minaret ban) become irrelevant.

Just recently the EU was denied a seat at a new Asian conference. Why? The image is that the EU is still obsessed with internal factors and does not have a moderately united front (the article was on the Economist but I can’t find it). Wake up, get your act in order and forget the Brits because they are not sure whether they want to be America’s little cousin or Europe’s sibling (they will eventually get on board with the EU). Honestly, I don’t think the Euro will break up but it can. This line from the article says it best:

Breaking up the euro is not unthinkable, just very costly. Because they refuse to face up to the possibility that it might happen, Europe’s leaders are failing to take the measures necessary to avert it.

Pardon the grammar.