Hiya!
The last few days the headlines have all been about Spain's struggling economy and how they are going to meet the rising level of debt the nation has now incurred given that they are paying well above the 'unsustainable' 7% level that triggered bailouts for Greece, Portugal and Ireland. Stock markets around the world plummeted on Monday and again yesterday as investors ran for cover amid fears that several regional governments in Spain would be asking the central government for further funds to pay debts they are currently unable to meet. Both Valencia and Murcia yesterday asked for further funds to stave off the possibility of complete bankruptcy and this morning Cataluna followed suit in what, commentators say, is the most cash-starved and debt-ridden Province in Spain.
The 7.52% interest rate that Spain is now paying for it's 10 year loans is surely unsustainable in a country with little or no manufacturing industry, an unemployment rate of 24.4% and an economy so firmly entrenched in depression that without drastic and prompt intervention will surely cease to operate in any functional way. In Brussels yesterday Spain's Secretary of State for EU Affairs, Inigo Mendez de Vigo, tried to deflect attention from the immediate problem by pointing his finger at the "worrying gap between the decisions which are taken at the European Council and their implementation" following the last Euro summit (in June) where it had been agreed that part of the EU's €700bn bailout funds could be used to purchase bonds of those nations struggling to meet their debt repayments, thereby easing borrowing costs. However, inaction seems to be the order of the day with Germany also under pressure following the notice given by Moody's (ratings agency) that they may face a downgrade in their credit rating if things don't change, sparking mounting speculation that Germany may end the year in in an unprecedented recession.
In the Independent (Hamish McRae-The Independent) Hamish McRae talks about the 'inevitability' of the break-up of the Eurozone with Greece surely on way its' way out. Discussion, he says, has now switched to the pluses and minuses of Spain and/or Italy leaving as well as Greece, putting Euro politicians in a sort of political no-mans land, unsure of what to do or say in the face of an unheralded economic depression.
Faced with mounting fiscal debt and strife governments have previously been able to devalue their way out of a loss of competitiveness or inflate their way out of excessive debt in order to conceal any fiscal shortfalls, but within the Eurozone such tactics are not possible. Not so long ago when the Eurozone was visibly strong, standing shoulder to shoulder added not only financial strength and clout but increased political and social stability within the continent. But once the cracks started to appear the shoulder to shoulder aspect has been shown to be a weak and one dimensional policy that is now threatening to undermine the very core of the zone itself. Greece, then Ireland, then Portugal have wobbled. Now comes the turn of Spain, and possibly Italy too who may well be getting sucked into the same cycle of over-hiked interest rates and unsustainable repayment levels that is causing all the worry in Spain. Now in place of fiscal strength and political power we have so many political dominoes lined up, just waiting to be toppled over by the next financial earthquake.
In Spain, as well as in most of the developed world, we are facing rising dependency rates with more and more people unemployed and rising numbers of pensioners each year, and all at a time when tax revenues are dropping globally and people are demanding and expecting more from both their hard earned pennies and their hard-pressed governments.
So what is the answer?
There is no simple, one rule which can be applied to every situation in every nation with guaranteed success. Politicians the world over are facing new challenges and will need to find new answers to new problems if the Eurozone and the rest of the developed (or capitalist, if you prefer) world is to return to some sort of stable profitability. I don't believe that breaking up the Eurozone will be the saviour that many suggest. The investment, financially, socially and morally is surely too great now to enable a gangrenous limb or two to be severed in order to save the torso. At this stage treating the affected areas is a far better course of action than just lopping southern Europe off, a policy that would without doubt lead to a 2-tier Europe, and have disastrous social and political consequences around the Mediterranean nations that may well spill over into a more serious and violent reaction that could drag the whole of Europe into renewed military conflict.
A bit extreme perhaps but extreme conditions provoke extreme measures. Poverty, hunger and strife have led to many a revolution and should such a 2-tier Europe arrive then jealousy, bitterness and anger would be added to the list of grievances in the poorer, sunnier regions of Europe. I can't talk about how people in the cities of Spain are coping because I have no experience of this, but in the campo, in the countryside you can see the desperation on the gaunt, hungry faces of the people. With more and more imported cheap foods and crops the arable land of Spain is being left to rot. Young kids do not want to work the fields for an income that is dropping relative to the cost of living each and every year. More and more fields are just left to rot and overgrow. Whole crops wasted because it now costs more to pick and transport the yield than it can be sold for - signs at the sides of roads inviting passers-by to 'help themselves' to the crop are becoming a sad but increasingly desperate sign of the times.
Hardship is felt most by those at the bottom of the pile and in Spain, as in most countries, it is the rural areas that suffer the most. People try to hide their strains behind a smile and a wave, but once the smile has dissipated you can see eyes shooting furtive, worried glances at the faces of their children, at the holes in their clothes and the vacant places in their wallets. When they talk of their children's future it is not of Spain now, but of getting out. This is something new in a society where the family is, by tradition, everything. Now they talk of their children's future being elsewhere, somewhere apart from Spain, somewhere far away from the hardships of the parents. And for many parents now, that is all there is left. Many of those middle-aged men and women who are currently unemployed truly never expect to get a job again in their lives. Spain, they say, is finished. This economic depression will last a generation or more here by which time they will dead and their children will be gone.
And as for Spain? They don't know, but whatever future lies ahead for Spain it is not envisaged to be a bright one. I can only hope they are wrong.
P XXX
Showing posts with label Italy. Show all posts
Showing posts with label Italy. Show all posts
Wednesday, 25 July 2012
Friday, 11 November 2011
The Eurozone Crisis: A Retrospective View
Hiya!
Well it seems we are heading for global Crisis 2 this decade. Makes one wonder if the International Banks are playing some sort of game. "I know...let's see how badly we can fuck the planet up whilst still drawing top dollar for ourselves!"
"Can't be done!"
"Wanna bet?"
And the rest is history! And what isn't history, is either the present or the future of course!! In the present (in Spain at least) the people are suffering. Businesses seem to be closing on an almost daily basis and in many stores the shelves are sparsely covered with over-priced tittle-tattle that no-one wants. And that's just today? What calamities await us in the near future? Only God and Wall St. probably have the answer to that one!
But the short answer would seem to be that we are fucked and we are going to continue being fucked for some time yet!
The Eurozone is sliding towards chaos at an ever increasing rate of knots. Germany and France...our Euro buddies...Not!...have been meeting secretly to discuss the next step (http://gu.com/p/339bf) in (what might laughably be called New) Europe. If, as seems increasingly likely, one or more nations leave the Eurozone, then where Oh! where does that leave us who remain? Probably doffing our caps to German fiscal policies, that's where!
There is no doubt that Europe must change and whatsmore, change quickly if it is survive in any workable way. Leaving the Euro was always in the past an impossibility until the events of the past few months caused a fundamental turnaround in the minds of those in Brussels. But it's no good now saying that Greece should never have been allowed in. They were and now we have to lump it. The same with those countries who agreed to (voluntarily) join the Euro. Perhaps the big mistake was tying the Euro to pre-Euro exchange rates of the German Mark. Nations such as Greece and Italy should not have been allowed to enter the single currency until they had sorted out their own economies as well. As it was they were allowed to adopt the Euro despite being heavily debt-ridden, a situation that has now developed into a complete disaster. Qualification for the Euro was always fractious and changeable where it should have been strict and rigid. So desperate were we to embrace our 'neighbours' that no-one ever dreamed it might all backfire. Oh! for a time machine!
"We are witnessing fundamental changes to the economic and geopolitical order that have convinced me that Europe needs to advance now together or risk fragmentation. Europe must either transform itself or it will decline. We are in a defining moment where we either unite or face irrelevance," said José Manuel Barroso, the President of the European Commision said on Wednesday.
A defining moment indeed. Italy is now the big concern with many shouting above the endles din that it is too big to bailout! Europe's third largest economy cannot be allowed to sink and yet it cannot be bailed. What's the answer? Print bonds, my little Italian Presidente! Print bonds! That no-one will buy and are illegal anyway, not that illegality is something that has ever worried Belusbalony thus far! And why print bonds? Because, if Italy is too big bailout and yet it cannot be allowed to sink because it would surely drag the rest of Europe under the waves, printing bonds (or money) seems to be the only possible route out of the path of the on-rushing tsumani.
Quite rightly now, the Euro bosses are now getting more involved in national politics (witness the demise of both Papandreou and now Berlesconi) . Another thing that Brussels was never supposed to do. But retractions, back steps, sidesteps and reneging on previous promises is just political expediency these days. Make no mistake. Things are desperate and they are only going to get worse. And yet some still to believe that the Euro can survive. 'Charlemagne' at the Economist says we Europeans are now family (http://www.economist.com/node/21538204) and all that is happening is a family row!!! I don't know where he lives but it is definitely not anywhere close to me!
On the contrary in fact. I think that if the crisis deepens, as every predictor says it will in the early part of next year, and if we do see the loss of perhaps Greece, maybe Italy, possibly even Spain from the Euro, not only would the Eurozone 'family' be shrunken down, I think that in those dispossessed and debt-ridden countries we could well witness a return to strong nationalist fervour that could easily spread and engulf countries that are, and will remain, financially on their knees for the foreseeable future.
Even as the shadow of imminent disaster slowly envelops us all in Europe I cannot help but make comparisons with what has come before. After WW1 Germany was a country in name only. It had massive unemployment, low, if not non-existant national pride, an infrastructure that had been decimated after years of conflict and yet, within 25 years it had risen to become the most powerful nation in Europe. We all know what followed.
Hitler rose to power on the back of nationalist fervour the like of which has probably never been seen before or since. He roused the pride in Germans. Made them proud to be German again and the German people adored him for this (nothwithstanding his later war-mongering and megalomania). In pre-War Germany Hitlar was a hero. A visionary who gave Germany back to the Germans and got them working again.
Today, with the Eurozone's policies of open-door immigration we have all witnessed the floods of people from the poorer European nations to the richer ones. That these people should be entitled to make a good living, I think is a universal human prerogative. Problems have arisen though, as we all know, in limiting the numbers of immigrants. In the UK this became a huge problem a few years ago and it is still not resolved. I'm not sure it ever could be solved now. The UK is too multi-national, too cosmopolitan these days. And certainly in the UK it has led many, (myself included) born and bred in the British Isles, to wonder where our Britishness has gone. Today in the UK it is a widely vaunted sin to be proud of being British. Those with national pride are viewed as low-browed Neanderthals who need to be cleansed of the sin of patriotism. And what's more patriotism always seems to be equated with racism. Admittedly, in some cases this may be true. But for me, to be a patriot is not to be racist. They are quite clearly, NOT one and the same thing. For me, in the UK today, there is no British culture anymore. True Brits have become so scared to stand up for their Britishness that it is now all but gone. 'PC' politics and the need to respect another's culture have been taken to ridiculous extremes and resulted in a watering down of your average Brit until our culture is harder to find than than a thin man in Mississippi! In London today every culture is represented except British. We, as a cultural force, do not exist anymore.
But not so elsewhere in Europe. And (in Spain at least) there is much talk of reversing the open-door policy and getting rid of all the unwelcome additions. In Spain we have elections in the next few days and, even though, the parties are all pretty much of the same monotone grey, there has been a definite move towards a more socialist ideal. Vive Franco!!! The Spanish want Spain for the Spanish and it seems the clamour for a man who can deliver this is growing proportionately as the crisis deepens. And if that is happening here, where most people are fairly moderate and open-minded, then what must it be like in Greece? Or in Italy? Or even in Germany, where they can see all their hard-work being squandered by the tinpot, partying politicians (i.e. Berlusbalony!) of broke and breaking Euro-allies? In France, a country with a strong socialist base, there are many calling for a complete rout of the country to kick out the 'legal' invaders and to return the country to it's people.
For me a rise in nationalism in those nations worse-affected is inevitable should this crisis continue to deepen and whilst I seriously doubt that it would end up in WW3 I do think that the protectionist policies that would follow such a rise would result in a rise in patriotism, much racial discalm and would eventually lead to violent conflict somewhere down the line.
The last time the whole world was in global financial meltdown was following the Wall Street crash of 1927 and the debilitating depression of the 1930's. And what got the world out of depression was of course a global conflict. It is a very different world now to that before WW2, but the parallels are there for all to see. Now we just wait, watch and hope that things improve before such extremisms can develop.
Well it seems we are heading for global Crisis 2 this decade. Makes one wonder if the International Banks are playing some sort of game. "I know...let's see how badly we can fuck the planet up whilst still drawing top dollar for ourselves!"
"Can't be done!"
"Wanna bet?"
And the rest is history! And what isn't history, is either the present or the future of course!! In the present (in Spain at least) the people are suffering. Businesses seem to be closing on an almost daily basis and in many stores the shelves are sparsely covered with over-priced tittle-tattle that no-one wants. And that's just today? What calamities await us in the near future? Only God and Wall St. probably have the answer to that one!
But the short answer would seem to be that we are fucked and we are going to continue being fucked for some time yet!
The Eurozone is sliding towards chaos at an ever increasing rate of knots. Germany and France...our Euro buddies...Not!...have been meeting secretly to discuss the next step (http://gu.com/p/339bf) in (what might laughably be called New) Europe. If, as seems increasingly likely, one or more nations leave the Eurozone, then where Oh! where does that leave us who remain? Probably doffing our caps to German fiscal policies, that's where!
There is no doubt that Europe must change and whatsmore, change quickly if it is survive in any workable way. Leaving the Euro was always in the past an impossibility until the events of the past few months caused a fundamental turnaround in the minds of those in Brussels. But it's no good now saying that Greece should never have been allowed in. They were and now we have to lump it. The same with those countries who agreed to (voluntarily) join the Euro. Perhaps the big mistake was tying the Euro to pre-Euro exchange rates of the German Mark. Nations such as Greece and Italy should not have been allowed to enter the single currency until they had sorted out their own economies as well. As it was they were allowed to adopt the Euro despite being heavily debt-ridden, a situation that has now developed into a complete disaster. Qualification for the Euro was always fractious and changeable where it should have been strict and rigid. So desperate were we to embrace our 'neighbours' that no-one ever dreamed it might all backfire. Oh! for a time machine!
"We are witnessing fundamental changes to the economic and geopolitical order that have convinced me that Europe needs to advance now together or risk fragmentation. Europe must either transform itself or it will decline. We are in a defining moment where we either unite or face irrelevance," said José Manuel Barroso, the President of the European Commision said on Wednesday.
A defining moment indeed. Italy is now the big concern with many shouting above the endles din that it is too big to bailout! Europe's third largest economy cannot be allowed to sink and yet it cannot be bailed. What's the answer? Print bonds, my little Italian Presidente! Print bonds! That no-one will buy and are illegal anyway, not that illegality is something that has ever worried Belusbalony thus far! And why print bonds? Because, if Italy is too big bailout and yet it cannot be allowed to sink because it would surely drag the rest of Europe under the waves, printing bonds (or money) seems to be the only possible route out of the path of the on-rushing tsumani.
Quite rightly now, the Euro bosses are now getting more involved in national politics (witness the demise of both Papandreou and now Berlesconi) . Another thing that Brussels was never supposed to do. But retractions, back steps, sidesteps and reneging on previous promises is just political expediency these days. Make no mistake. Things are desperate and they are only going to get worse. And yet some still to believe that the Euro can survive. 'Charlemagne' at the Economist says we Europeans are now family (http://www.economist.com/node/21538204) and all that is happening is a family row!!! I don't know where he lives but it is definitely not anywhere close to me!
On the contrary in fact. I think that if the crisis deepens, as every predictor says it will in the early part of next year, and if we do see the loss of perhaps Greece, maybe Italy, possibly even Spain from the Euro, not only would the Eurozone 'family' be shrunken down, I think that in those dispossessed and debt-ridden countries we could well witness a return to strong nationalist fervour that could easily spread and engulf countries that are, and will remain, financially on their knees for the foreseeable future.
Even as the shadow of imminent disaster slowly envelops us all in Europe I cannot help but make comparisons with what has come before. After WW1 Germany was a country in name only. It had massive unemployment, low, if not non-existant national pride, an infrastructure that had been decimated after years of conflict and yet, within 25 years it had risen to become the most powerful nation in Europe. We all know what followed.
Hitler rose to power on the back of nationalist fervour the like of which has probably never been seen before or since. He roused the pride in Germans. Made them proud to be German again and the German people adored him for this (nothwithstanding his later war-mongering and megalomania). In pre-War Germany Hitlar was a hero. A visionary who gave Germany back to the Germans and got them working again.
Today, with the Eurozone's policies of open-door immigration we have all witnessed the floods of people from the poorer European nations to the richer ones. That these people should be entitled to make a good living, I think is a universal human prerogative. Problems have arisen though, as we all know, in limiting the numbers of immigrants. In the UK this became a huge problem a few years ago and it is still not resolved. I'm not sure it ever could be solved now. The UK is too multi-national, too cosmopolitan these days. And certainly in the UK it has led many, (myself included) born and bred in the British Isles, to wonder where our Britishness has gone. Today in the UK it is a widely vaunted sin to be proud of being British. Those with national pride are viewed as low-browed Neanderthals who need to be cleansed of the sin of patriotism. And what's more patriotism always seems to be equated with racism. Admittedly, in some cases this may be true. But for me, to be a patriot is not to be racist. They are quite clearly, NOT one and the same thing. For me, in the UK today, there is no British culture anymore. True Brits have become so scared to stand up for their Britishness that it is now all but gone. 'PC' politics and the need to respect another's culture have been taken to ridiculous extremes and resulted in a watering down of your average Brit until our culture is harder to find than than a thin man in Mississippi! In London today every culture is represented except British. We, as a cultural force, do not exist anymore.
But not so elsewhere in Europe. And (in Spain at least) there is much talk of reversing the open-door policy and getting rid of all the unwelcome additions. In Spain we have elections in the next few days and, even though, the parties are all pretty much of the same monotone grey, there has been a definite move towards a more socialist ideal. Vive Franco!!! The Spanish want Spain for the Spanish and it seems the clamour for a man who can deliver this is growing proportionately as the crisis deepens. And if that is happening here, where most people are fairly moderate and open-minded, then what must it be like in Greece? Or in Italy? Or even in Germany, where they can see all their hard-work being squandered by the tinpot, partying politicians (i.e. Berlusbalony!) of broke and breaking Euro-allies? In France, a country with a strong socialist base, there are many calling for a complete rout of the country to kick out the 'legal' invaders and to return the country to it's people.
For me a rise in nationalism in those nations worse-affected is inevitable should this crisis continue to deepen and whilst I seriously doubt that it would end up in WW3 I do think that the protectionist policies that would follow such a rise would result in a rise in patriotism, much racial discalm and would eventually lead to violent conflict somewhere down the line.
The last time the whole world was in global financial meltdown was following the Wall Street crash of 1927 and the debilitating depression of the 1930's. And what got the world out of depression was of course a global conflict. It is a very different world now to that before WW2, but the parallels are there for all to see. Now we just wait, watch and hope that things improve before such extremisms can develop.
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