Best of the Week
Most Popular
1. Investing in a Bubble Mania Stock Market Trending Towards Financial Crisis 2.0 CRASH! - 9th Sep 21
2.Tech Stocks Bubble Valuations 2000 vs 2021 - 25th Sep 21
3.Stock Market FOMO Going into Crash Season - 8th Oct 21
4.Stock Market FOMO Hits September Brick Wall - Evergrande China's Lehman's Moment - 22nd Sep 21
5.Crypto Bubble BURSTS! BTC, ETH, XRP CRASH! NiceHash Seizes Funds on Account Halting ALL Withdrawals! - 19th May 21
6.How to Protect Your Self From a Stock Market CRASH / Bear Market? - 14th Oct 21
7.AI Stocks Portfolio Buying and Selling Levels Going Into Market Correction - 11th Oct 21
8.Why Silver Price Could Crash by 20%! - 5th Oct 21
9.Powell: Inflation Might Not Be Transitory, After All - 3rd Oct 21
10.Global Stock Markets Topped 60 Days Before the US Stocks Peaked - 23rd Sep 21
Last 7 days
Stock Market January PANIC AI Tech Stocks Buying Opp - Trend Forecast 2022 - 21st Jan 21
How to Get Rich in the MetaVerse - 20th Jan 21
Should you Buy Payment Disruptor Stocks in 2022? - 20th Jan 21
2022 the Year of Smart devices, Electric Vehicles, and AI Startups - 20th Jan 21
Oil Markets More Animated by Geopolitics, Supply, and Demand - 20th Jan 21
WARNING - AI STOCK MARKET CRASH / BEAR SWITCH TRIGGERED! - 19th Jan 22
Fake It Till You Make It: Will Silver’s Motto Work on Gold? - 19th Jan 22
Crude Oil Smashing Stocks - 19th Jan 22
US Stagflation: The Global Risk of 2022 - 19th Jan 22
Stock Market Trend Forecast Early 2022 - Tech Growth Value Stocks Rotation - 18th Jan 22
Stock Market Sentiment Speaks: Are We Setting Up For A 'Mini-Crash'? - 18th Jan 22
Mobile Sports Betting is on a rise: Here’s why - 18th Jan 22
Exponential AI Stocks Mega-trend - 17th Jan 22
THE NEXT BITCOIN - 17th Jan 22
Gold Price Predictions for 2022 - 17th Jan 22
How Do Debt Relief Services Work To Reduce The Amount You Owe? - 17th Jan 22
RIVIAN IPO Illustrates We are in the Mother of all Stock Market Bubbles - 16th Jan 22
All Market Eyes on Copper - 16th Jan 22
The US Dollar Had a Slip-Up, but Gold Turned a Blind Eye to It - 16th Jan 22
A Stock Market Top for the Ages - 16th Jan 22
FREETRADE - Stock Investing Platform, the Good, Bad and Ugly Review, Free Shares, Cancelled Orders - 15th Jan 22
WD 14tb My Book External Drive Unboxing, Testing and Benchmark Performance Amazon Buy Review - 15th Jan 22
Toyland Ferris Wheel Birthday Fun at Gulliver's Rother Valley UK Theme Park 2022 - 15th Jan 22
What You Should Know About a TailoredPay High Risk Merchant Account - 15th Jan 22
Best Metaverse Tech Stocks Investing for 2022 and Beyond - 14th Jan 22
Gold Price Lagging Inflation - 14th Jan 22
Get Your Startup Idea Up And Running With These 7 Tips - 14th Jan 22
What Happens When Your Flight Gets Cancelled in the UK? - 14th Jan 22
How to Profit from 2022’s Biggest Trend Reversal - 11th Jan 22
Stock Market Sentiment Speaks: Are We Ready To Drop To 4400SPX? - 11th Jan 22
What's the Role of an Affiliate Marketer? - 11th Jan 22
Essential Things To Know Before You Set Up A Limited Liability Company - 11th Jan 22
NVIDIA THE KING OF THE METAVERSE! - 10th Jan 22
Fiscal and Monetary Cliffs Have Arrived - 10th Jan 22
The Meteoric Rise of Investing in Trading Cards - 10th Jan 22
IBM The REAL Quantum Metaverse STOCK! - 9th Jan 22
WARNING Failing NVME2 M2 SSD Drives Can Prevent Systems From Booting - Corsair MP600 - 9th Jan 22
The Fed’s inflated cake and a ‘quant’ of history - 9th Jan 22
NVME M2 SSD FAILURE WARNING Signs - Corsair MP600 1tb Drive - 9th Jan 22
Meadowhall Sheffield Christmas Lights 2021 Shopping - Before the Switch on - 9th Jan 22
How Does Insurance Work In Europe? Find Out Here - 9th Jan 22
MATTERPORT (MTTR) - DIGITIZING THE REAL WORLD - METAVERSE INVESTING 2022 - 7th Jan 22
Effect of Deflation On The Gold Price - 7th Jan 22
Stock Market 2022 Requires Different Strategies For Traders/Investors - 7th Jan 22
Old Man Winter Will Stimulate Natural Gas and Heating Oil Demand - 7th Jan 22
Is The Lazy Stock Market Bull Strategy Worth Considering? - 7th Jan 22
METAVERSE - NEW LIFE FOR SONY AGEING GAMING GIANT? - 6th Jan 2022
What Elliott Waves Show for Asia Pacific Stock and Financial Markets 2022 - 6th Jan 2022
Why You Should Register Your Company - 6th Jan 2022
4 Ways to Invest in Silver for 2022 - 6th Jan 2022
UNITY (U) - Metaverse Stock Analysis Investing for 2022 and Beyond - 5th Jan 2022
Stock Market Staving Off Risk-Off - 5th Jan 2022
Gold and Silver Still Hungover After New Year’s Eve - 5th Jan 2022
S&P 500 In an Uncharted Territory, But Is Sky the Limit? - 5th Jan 2022

Market Oracle FREE Newsletter

How to Protect your Wealth by Investing in AI Tech Stocks

Euro-zone Sovereign Debt Crisis Solution - Europeans it's Time To Wake Up!

Politics / Eurozone Debt Crisis May 21, 2012 - 03:56 AM GMT

By: Andrew_McKillop

Politics

Best Financial Markets Analysis ArticleSince 2008, EU27 sovereign debt has grown at least 3500 billion euros, most Eurozone countries and many other EU countries are in recession, over 50% of young Spaniards are out of work, and over 25% are out of work in most other EU27 countries. Elections across Europe for at least the past 12 months only show the rejection of any incumbent government, and major growth of voter support for both extreme right and extreme left parties and programmes.


Despite this total failure of conventional or "liberal democratic" politics, the leaders of Europe’s largest countries continue saying they have no alternative to austerity, although this blanket refusal to change is now breaking up. More than at any time for a decade or longer, there is now a straight choice between No Alternative politics from politicians who have run out of ideas, and those with plans for rapidly moving away from certain disaster.

No better example of this was the presidential election standoff in France, between outgoing Nicolas Sarkozy and incoming Francois Hollande: the first spent his time pleading that History, or at least the global economy had given him a bad deal and sitting tight was the only thing to do. In fact, Sarkozy's refusal to accept his own "laisser faire" politics and programmes had intensified the crisis was one sure reason voters turned away from him - but also accelerated the loss of faith, of French voters in the whole democratic process as revealed in countless polls and despite high voter turnout..

GLOBAL CHANGE
In the US it is also election time and preventing a major new collapse of investor confidence and slump of equity values, if global growth weakens further and Europe lurches into disaster, is focusing G8 attention and bilateral talks between Obama and European leaders. The greatest problem is the leadership deficit: no global economic leadership has emerged. The people are paying the price.

Especially in Europe but also in the US, leaders have deliberately forgotten the first lesson of globalisation: that it is all or nothing. We can succeed or can fail together. Making failure almost totally certain however, the outgoing president of France, Sarkozy, and the now politically weakened German chancellor Merkel have wasted huge amounts of our limited time, and financial resources, and have weakened voter belief in the entire political process through continuing to pursue what they called "financial stability measures". Austerity in Europe will have continuing negative impacts on the US, China, India and other G20 economies: economic collapse in Europe will harm them also. The time is short and progress towards a lasting solution in Europe is now the only solution.

Across Europe and not only the most debt-wracked PIIGS, the clear outlook at present, on current "neoliberal and deflationary" policies, is for sure and certain double dip recession. Borrowing needs can only spiral if that happens. Interest rates on government debt will break out of their artificially low safety zone, for country after country. With no surprise therefore, Obama and Hollande's first bilateral meeting was productive and friendly: both need growth, have to do something fast, and know it.

GROWTH BUT HOW ?
More than ever the only possible read-out is growth, but as much as 25 years of "laisser faire" politics has hollowed out the economic productive machine, in country after country. Simply due to this, no short-term export led growth model is even vaguely credible: domestic investment as well as domestic consumption will have to feature large, with all the dangers they set. Just as certainly, austerity is the worst possible policy. In the 1930s, austerity and protectionism which at the time was not disguised but is disguised today - and is even 'structural' at the level of G20 - powerfully intensified the downward spiral into collective depression: there is no reason to believe that will not happen again if austerity continues to be blindly applied.

Increasingly since late 2011, leaders talk about boosting domestic demand while they also cut jobs in public services, raise taxes, discourage enterprise initiative but rush to aid the dysfunctional, even out of control finance sector, with the claim they have No Alternative. Their pretext is that global economic conditions are materially worsening, and only worsen. They completely refuse to admit their action, and mostly inaction, is the root cause of this.

The Eurozone debt crisis, and the runaway debt growth of other EU countries like the UK, is completely able to be solved: Eurobonds and a critical dose of political courage facing "the markets" can achieve this very fast. Certain countries in Europe, such as France under Sarkozy which not only enabled, but incited their banks to massively play on Greek, Italian and other PIIGS debt - after receiving huge bailouts from the Sarkozy government following the 2008-2009 rout - may have to take rapid and drastic action with their bank sector. What matters, is that public opinion is more than prepared to support this, without simply splitting along left-right ideological lines.

Due to the Sarkozy-type and Cameron-type of "laisser faire" economics, politics, industrial strategy and all the rest, conditions in Europe have now unquestionably worsened. There is no longer any choice but to abandon No Alternative. And of course, as it knows very well, Germany will have to recognise it must also support demand.

The absence of a Federal European state has no importance. Within the eurozone there is already the European Central Bank, which finally will respond to political direction and control: it is ideally structured and positioned to act as lender of last resort, the only reason it does not is so-called "liberal economics" and the so-called single goal of preventing inflation. The crisis facing Europe, today, is of an extreme massive economic slump causing massive deflation, starting with property values and equity values. The claim that the ECB "is unable to act" is hogwash.

Above all, both within Europe, in the G8 and in G20 the main lesson is that global banking and finance have run out of control and must be controlled. Leaders must set a programme of collective action, a shared agenda for growth and act like what they say they are: governors. If not the worst is certain and this current crop of political leaders will regret their refusal to govern.

By Andrew McKillop

Contact: xtran9@gmail.com

Former chief policy analyst, Division A Policy, DG XVII Energy, European Commission. Andrew McKillop Biographic Highlights

Co-author 'The Doomsday Machine', Palgrave Macmillan USA, 2012

Andrew McKillop has more than 30 years experience in the energy, economic and finance domains. Trained at London UK’s University College, he has had specially long experience of energy policy, project administration and the development and financing of alternate energy. This included his role of in-house Expert on Policy and Programming at the DG XVII-Energy of the European Commission, Director of Information of the OAPEC technology transfer subsidiary, AREC and researcher for UN agencies including the ILO.

© 2012 Copyright Andrew McKillop - 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.


© 2005-2019 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