Most Popular
1. It’s a New Macro, the Gold Market Knows It, But Dead Men Walking Do Not (yet)- Gary_Tanashian
2.Stock Market Presidential Election Cycle Seasonal Trend Analysis - Nadeem_Walayat
3. Bitcoin S&P Pattern - Nadeem_Walayat
4.Nvidia Blow Off Top - Flying High like the Phoenix too Close to the Sun - Nadeem_Walayat
4.U.S. financial market’s “Weimar phase” impact to your fiat and digital assets - Raymond_Matison
5. How to Profit from the Global Warming ClImate Change Mega Death Trend - Part1 - Nadeem_Walayat
7.Bitcoin Gravy Train Trend Forecast 2024 - - Nadeem_Walayat
8.The Bond Trade and Interest Rates - Nadeem_Walayat
9.It’s Easy to Scream Stocks Bubble! - Stephen_McBride
10.Fed’s Next Intertest Rate Move might not align with popular consensus - Richard_Mills
Last 7 days
Nvidia Numero Uno in Count Down to President Donald Pump Election Victory - 5th Nov 24
Trump or Harris - Who Wins US Presidential Election 2024 Forecast Prediction - 5th Nov 24
Stock Market Brief in Count Down to US Election Result 2024 - 3rd Nov 24
Gold Stocks’ Winter Rally 2024 - 3rd Nov 24
Why Countdown to U.S. Recession is Underway - 3rd Nov 24
Stock Market Trend Forecast to Jan 2025 - 2nd Nov 24
President Donald PUMP Forecast to Win US Presidential Election 2024 - 1st Nov 24
At These Levels, Buying Silver Is Like Getting It At $5 In 2003 - 28th Oct 24
Nvidia Numero Uno Selling Shovels in the AI Gold Rush - 28th Oct 24
The Future of Online Casinos - 28th Oct 24
Panic in the Air As Stock Market Correction Delivers Deep Opps in AI Tech Stocks - 27th Oct 24
Stocks, Bitcoin, Crypto's Counting Down to President Donald Pump! - 27th Oct 24
UK Budget 2024 - What to do Before 30th Oct - Pensions and ISA's - 27th Oct 24
7 Days of Crypto Opportunities Starts NOW - 27th Oct 24
The Power Law in Venture Capital: How Visionary Investors Like Yuri Milner Have Shaped the Future - 27th Oct 24
This Points To Significantly Higher Silver Prices - 27th Oct 24
US House Prices Trend Forecast 2024 to 2026 - 11th Oct 24
US Housing Market Analysis - Immigration Drives House Prices Higher - 30th Sep 24
Stock Market October Correction - 30th Sep 24
The Folly of Tariffs and Trade Wars - 30th Sep 24
Gold: 5 principles to help you stay ahead of price turns - 30th Sep 24
The Everything Rally will Spark multi year Bull Market - 30th Sep 24
US FIXED MORTGAGES LIMITING SUPPLY - 23rd Sep 24
US Housing Market Free Equity - 23rd Sep 24
US Rate Cut FOMO In Stock Market Correction Window - 22nd Sep 24
US State Demographics - 22nd Sep 24
Gold and Silver Shine as the Fed Cuts Rates: What’s Next? - 22nd Sep 24
Stock Market Sentiment Speaks:Nothing Can Topple This Market - 22nd Sep 24
US Population Growth Rate - 17th Sep 24
Are Stocks Overheating? - 17th Sep 24
Sentiment Speaks: Silver Is At A Major Turning Point - 17th Sep 24
If The Stock Market Turn Quickly, How Bad Can Things Get? - 17th Sep 24
IMMIGRATION DRIVES HOUSE PRICES HIGHER - 12th Sep 24
Global Debt Bubble - 12th Sep 24
Gold’s Outlook CPI Data - 12th Sep 24

Market Oracle FREE Newsletter

How to Protect your Wealth by Investing in AI Tech Stocks

Greece Isn’t Really The Problem - The Euro's Fatal Flaw...

Politics / Euro-Zone Feb 16, 2015 - 04:17 PM GMT

By: John_Rubino

Politics

The euro’s fatal flaw was always people. The fact that most eurozone countries are at least nominally democratic and keep having elections means that the more complicated and draconian the process of merging them into one entity ruled by unelected bureaucrats in Brussels becomes, the harder it is to elect people at the national level who want to keep going.

Greece is an obvious example, and will provide some thrills and chills as its debt negotiations lurch to the inevitable extend-and-pretend resolution. But much bigger things are brewing as the euro’s issues bite other constituencies in other ways.


In Italy, for instance, the new government recognizes that the country’s only chance of functioning under a stable currency is to make serious reforms in pretty much every corner of the economy, especially its almost child-like labor laws. Here’s a brief overview of those laws from the National Center For Policy Analysis:

• Cassa Integrazione Guadagni is a scheme that allows Italian businesses who need to shave their workforce to put a worker on “standby” rather than fire him outright. The government will pay the worker a large portion of his lost salary until he is rehired. Such a program keeps workers from moving to new jobs while businesses struggle to compete.

• Firing a worker in Italy for poor performance is incredibly difficult, and employers have to convince a judge that there is no alternative option available to the employer short of firing the worker. These hearings can take months, and litigation is not cheap.

• According to the World Economic Forum, Italy ranked 141st out of 144 countries in terms of its hiring and firing practices.

• Italian unions are stubborn, and businesses — in order to avoid having to negotiate with them — stay small. Of all the countries in the European Union, Italy has the largest number of small businesses because companies are concerned about what growth would mean in terms of union negotiations.

But of course the Italians don’t like the idea of a free market in work, so they’re taking some personal days to make the point. See Hundreds of thousands rally in Rome in protest over ‘anti-job’ reforms.

Governments, meanwhile, don’t like having to deal with dissent, so in Spain and elsewhere they’re trying to make it harder to organize — which simply creates a new issue for demonstrators to protest. See Spaniards take to streets to protest ‘draconian’ new security laws.

For Germans the situation is a little different because they until recently have benefited from being able to sell things to the big-borrowing eurozone periphery. But now the debt thus created is looking like it will have to be covered by German taxpayers, and they’re starting to regret their past decisions. See Angela Merkel’s conservatives suffer worst election result since WWII.

So here’s a modest prediction. After a bit more brinksmanship, Greece gets an extension and disappears from the headlines for a while. Then the focus shifts to the eurozone’s real threats, which are the bigger countries where anti-euro forces on both left and right are gaining popularity. With Podemos (Spain, radical left) and National Front (France, radical right) now leading in opinion polls, sitting politicians will start doing all kinds of crazy things to keep their jobs. Negative interest rates will spread, debt monetization will expand, and the euro will get even weaker.

Then Greece will resurface, having failed to transform itself into a fully-functioning capitalist economy, and the whole thing will start again. But from an even more precarious place.

By John Rubino

dollarcollapse.com

Copyright 2015 © John Rubino - All Rights Reserved

Disclaimer: The above is a matter of opinion provided for general information purposes only and is not intended as investment advice. Information and analysis above are derived from sources and utilising methods believed to be reliable, but we cannot accept responsibility for any losses you may incur as a result of this analysis. Individuals should consult with their personal financial advisors.


© 2005-2022 http://www.MarketOracle.co.uk - The Market Oracle is a FREE Daily Financial Markets Analysis & Forecasting online publication.


Post Comment

Only logged in users are allowed to post comments. Register/ Log in