The Eurozone crisis, Is there a way out?

[liveco.livejournal.com]

I was just reading now on LA times (McManus: Europe's continental drift), and a phrase really captured my attention; The author, while describing how bad the situation is in Europe (especially the southern countries) goes as far as saying:

"Southern Europe is experiencing its worst drop in living standards since World War II"

To anyone who has been following the economy news for the last 5 years, this wouldn't come as a surprise, yet, as curious as i am always, I read further and then did my own research about the countries in Spain, Italy, Greece and Portugal. I checked three indicator, GDP growth in year 2012, unemployment in the Eurozone Countries and Public Debt as a % of the GDP.

GDP Growth in year 2012
Greece: -6.4%
Spain: -1.4%
Italy: -2.4 %
Portugal: -3.2 %

Unemployment Percentage in march 2013
Greece: 27%
Spain: 27.1%
Italy: 12.6%
Portugal: 17.7%

Public Debt as a % of the GDP
Greece: 161%
Spain: 85.3%
Italy: 126%
Portugal: 120%

The numbers say it all, the economies of Greece, Spain, Italy and Portugal are shrinking, the unemployment is very high (numbers reach 50% in youth unemployment alone) and the public debt is high especially in Greece.

The crisis is turning into a humanitarian issue especially in Greece and Spain; it is becoming more difficult to make a living and maintain even the basics of survival.

Is there a way out of this economic crisis?

Comments

[malasadas.livejournal.com]

I'm sure all that is needed is just one more round of austerity measures.

[liveco.livejournal.com]

Well, I can sense a little bit of sarcasm here, :), economists usually argue what is the best approach to a fast recovery from an economic crisis. Austerity measure seem to cut the expenses, but also indirectly have negative effect on the economic growth, on the other hand, sound economic investments and reforms and restructuring seem to have high cost in the start but pay off on the long run

[malasadas.livejournal.com]

The sarcasm is there, definitely. It is aimed at the political classes in Northern Europe who seem to still be intent on inflicting a morality play upon their fellow Eurozone nations rather than a) admit their role in the crisis by both ignoring the Eurozone wide neglect of agreements to align fiscal policy with monetary union and the happy profit taking by wealthy investors everywhere in pumping up the building bubble in the South and b) actually find plans that might WORK.

[farmerz-agent.livejournal.com]

Educate me:

What are the successful European countries? German? Are there any others that are doing well? What is Germany doing differently than these other countries?

[htpcl.livejournal.com]

I'm guessing the most basic stereotype is: "Germans work like crazy; also, Germany actually produces stuff".

[liveco.livejournal.com]

it is actually true, I had some German and Austrian Colleagues and their dedication and work ethics are admirable.

[liveco.livejournal.com]

Well, It is simple, they manufacture cars that the whole world want to drive (if they can afford to), yet they drive the cheaper Japanese cars or take the metro or bus because they are practical and do not value luxury. It is because anything "Made in Germany" lasts forever and is almost 100% guaranteed to work properly.

[liveco.livejournal.com]

Which is the opposite to what the Greek, Spanish and Italian do, they wanna drive the most luxurious cars, earn more money and work less... it is all about the culture. Please don't get me wrong, I have nothing against these countries, just reading articles and observing people.

[peamasii.livejournal.com]

Germany, Finland, Austria, the Netherlands, Denmark, Sweden... they are all doing well.

[farmerz-agent.livejournal.com]

Does Austria count? What is working for Netherlands, Denmark and Sweden?

[sophia-sadek.livejournal.com]

The successful countries lure smart people away from the less successful countries with the bait of liberal social values.

[farmerz-agent.livejournal.com]

So German is more liberal socially than Greece or Italy?

[peristaltor.livejournal.com]

Germany has a law that requires all corporations over a certain size to appoint common employees to the decision-making boards. This means that, rather than have an adversarial relationship with its labor (as a union shop would require), the board decisions includes the workers already, changing the possible outcomes from everything from hours worked to economic downturn strategies.

As a result, they often reduce work hours rather than lay off employees. Further, since no one knows when they themselves might be appointed to the board for a year, people are still reading newspapers, and not the fluff tabloid stuff, as well as keeping an ongoing education generally. A better informed board member makes better decisions.

Further, the Germans as a rule really, really don't trust debt, fearing that it will once again hyperinflate. This has resulted in well capitalized banks and companies, which tend to be more stable in the long run.

[meus-ovatio.livejournal.com]

There is a surefire way out of these problems.

Tell the banks and creditors that they lost out on bad bets and bad investments. Cancel the debt. Withdraw from the euro. Re-nationalize the currency and the central banks for those countries.

This is the only way out of the mess. But it won't happen because:

A)It makes sense, and the technorati refuse to do anything that makes sense, ever, at all, not even once,
B)Too many very powerful people stand lose a lot of money, and they are more important than an entire generation of Europeans lives and livelihoods.
C)People inherently believe that slavery is ok, and enslaving an entire populace into paying off bad debt taken on by foolish banks is morally honorable.

[farmerz-agent.livejournal.com]

If we re-nationalize their currency and start over why would these countries not just continue to over spend?

C) Who is responsible for this debt, the people and governments they elected right? Is it morally honorable to borrow money and spend then blame the people you borrowed the money from? Did the Greeks, Italians, Spaniards and Portuguese really think they could spend and spend without consequences?

Eventually you run out of other people's money.

[peamasii.livejournal.com]

Do those things and you'll end up with pre-EU europe, when the growth rate was way behind the UK and the US. No way in hell that France or Germany would want/allow that to happen. As shrinking as the peripheral EU economies are, they are still far more valuable as part of the EU than not.

[peristaltor.livejournal.com]

This.

[pastorlenny.livejournal.com]

The fact that you would even think about prioritizing the well-being of shiftless youth above the moral integrity of capital allocation only underscores how certainly the experiment we call "Western Civilization" is doomed to failure. The future clearly belongs to the Overman.

[rimpala.livejournal.com]

Maybe the Euro just doesn't work, the EU is fine and all but maybe there is just too many different countries to keep track of economically. I'm just guessing don't get me wrong, it's going to take me a while to fully assess what the problem is since I don't live over there and cannot fathom what its really like.

[malasadas.livejournal.com]

Monetary union without fiscal union. Everyone, including the scolds in the North, winked and blinked at the lack of coordinated fiscal policy because their banks were all getting rich.

[sophia-sadek.livejournal.com]

The southern countries all have orthodoxy on their side. Perhaps that is why people leave them for a more heretical climate.

[flaming-goat.livejournal.com]

Is there a way out of this economic crisis?

Get rid of the politicians and the bankers, obviously. Preferably with fire.

[rimpala.livejournal.com]

get rid of the money!

[dwer.livejournal.com]

how's that austerity program working out?

Oh, right. It's not.

Is there a way out? Sure. Spending. Lots and lots and lots of it.

[peristaltor.livejournal.com]

Don't forget debt forgiveness. You need that.