03/19/2010
financial risk : is Greece the beginning of the end of the Euro
Since about 6 months ago speculatio- has begun about the future or the breakup of the Euro - the political money that is the pride of Europe and is the proof that we are a continent that in fact is ruling the world instead of a weak dollar that is proof that the hegemony of the US is finished.
But it is important to understand a few facts if one wants to understand the present crisis and the discussions that are developing around it
* there is no European Union and no European President and in fact not even a real European policy. There is only a international coordination between 27 states that agree to coordinate certain policies in a certain matter. These reunions are presided by Van Rompuy that one calls an European President but in fact has no power at all and is not elected as such. There is no European Government but a European Commission that executes the decisions that are being made by the 27 leaders of the European states.
* there is no European money even if one calls it Euro and it is being used inj a certain number of states. It is not really a money because it doesn't have the necessary instruments to defend itself and to coordinate the policies between states. This is the reason for which the European Monetarian Fund has been forgooten.
* Germany wanted that the Euro would be based on the mark their national money at the time. The compromise is that the money is called Euro but that for the rest everything monetarian reflects the German viewpoints. German policymakers remember that in the 1920's and 30's Germany knew a period of political distabilisation because of hyperinflation. The European national bank which is based in Germany - by accident ? Doesn't interfere much when the expensive Euro is killing European industrial porduction by making exporting outside the Eurozone a very difficult taski indeed.
* At the same time Germany has changed its econmic policy totally and has lowered in agreement with the unions the wage of thousands of her workers dramatically. The result is that Germany has changed from an importmarket for the other European countries to an exporter to the European countries. The reason is that they have lowered their wages so much and improved their productionprocesses so much that the other European countries have difficulty exporting to Germany. As the wages in Germany has lowered consumption have been diminishing also which makes exporting to Germany even harder.
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