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Europe once again stands on the brink of the abyss, saving Plan of Greece, which recently passed on the brink of collapse, and the crisis of confidence has moved from the States Parties to the countries of the center in the euro area, and the survival of the euro, but the European Union as a whole, is at stake.
To restore the lost confidence, European leaders responded to the crisis through a variety of proposals.
European Central Bank President Jean-Claude Trichet called for the application of stricter rules on the budgets of the Member States, and President of the Bank of Italy and the successor of Trichet at the ECB Mario Draghicalled for the imposition of ceiling bindings rather than on budgets, but also a wide range of national economic policies of Member States.
The leader of the Alliance of Liberals and Democrats for Europe in the European Parliament, Guy Verhofstadthas called for, among a chorus of voices rising to the issuance of "bonds, euros," while the opinion of the German Finance Minister Wolfgang Schaeuble that Europe has to turn to the Union a full financial (Fiscal Union) .
If it is a common denominator among these proposals is the failure to provide solutions to urgent and pressing problems experienced by the euro area. Some of the proposals mentioned above (tightening of the rules of financial controls and policies that affect the competitiveness) may help prevent future crises, but is unable to cure the current crisis.
Other proposals, like moving to a full financial, may require deep review of the treaties that established by the European Union, while the euro bond issue will require a political consensus among Member States, which require months if not years to come.
Europe does not have the months as well as to have a year to treat this crisis. At this stage of the crisis has only a few days to prevent the worst, and we must distinguish between their leaders what to do now and what can be left for the future.
The first step
Pressing the first steps Europe must take is to fortify its banks, Doubts in the stability of the compound in the essential core of the crisis, not a coincidence that the assets of these banks suffered a badly damaged by the recent financial meltdown.
There are several ways to recapitalize European banks vulnerable. And governments can, French, German, thanks to the margins available in the Mesnyatea, be doing so alone.
In the case of countries with weak financial centers, registered European rescue fund and European financial stability facility to submit loans for this purpose. If there was a need for more money Fbmekdor the International Monetary Fund to establish a special facility for the use of its resources and matching funds provided by Asian governments and sovereign wealth funds.
The second task
The second is the urgent task to find an outlet for Greece, Valeonaon are making extraordinary efforts to stabilize their financial positions and the restructuring of their economy, but the government never stops fail to achieve their goals for financial reasons due to the global recession than to their mistakes are.
This raises the fear of abandonment of the European Union and the International Monetary Fund for their support might lead to the bankruptcy of Greece in trouble, not to mention the alarming effect of this scenario from the chaos of social, political and economic.
Political stability and social fragile in Greece, and perhaps a stray rubber bullet and one is all it takes to turn the protest demonstration next to the open civil war.
Again, the aid may take several forms, may accept creditors to ease the financial requirements of Greece, and the trade-off of bad debts, which agreed in July, can be abandoned and replaced by the agreement would relieve it from debt already. As can other countries in the European Union, France and Germany, to provide aid to them. And who spoke of the Marshall Plan for Greece to turn their words into action.
The third task
The third urgent task is to restore economic growth, financial stability is in all of Europe depends on the achievement of this end, Without growth, tax revenues will remain weak, and would diminish the ability of these countries to repay their debts.
And social stability is also linked to the restoration of growth, without growth, it becomes a burden austerity policies can not tolerate the European peoples.
This problem has several solutions as well, Fbasttaah Germany to cut taxes, and better yet to apply integrated economic stimulus plan in the countries of northern Europe.
However, the fact that the governments of the northern European countries remain unable to move because of domestic public opinion which, under these circumstances becomes the European Central Bank the only party to finance the stimulus plan proposed, and must reduce interest rates, and on the ECB to follow the operations of purchase and a widerange of assets such as operations announced by the Swiss National Bank recently.
If completed these three urgent tasks before us will be plenty of time to think about the radical changes in the system of the euro area (such as the adoption of new rules for budgets and achieve greater consistency between national policies of Member States and the transition to full monetary union).
As John Maynard Keynes, a senior economist theorists, day "in the long run everyone will die," and focus on the European leaders at the expense of long-term imperatives of short-term may spend on their single currency.
Professor of Economics and Political Science at the University of California and author of "The Rise and fall of the dollar."
Source: Project Syndicate