Edward Carr of The Economist looks at the Euro and the financial crisis in western Europe and comes up with a host of possible scenerios, most of them quite unpleasant. He notes that the change of governmemt in Greece has not established stability in that nation so far. He reminds the readers that millions of Spaniards are unemployed. "The struggle wll set the limits on Europe’s welfare state," he says. The unequal partnership of France and Germany is critical to the future of the Euro, since the governments of Greece, Portugal, Irelad, Spain and Italy owe $4.2 trillion in European bank borrowings.
Carr notes that the European Union has less indebtedness than America and can fortify its banks – but a convincing plan to rescue the Euro has not been put forth; instead stopgap measures have followed one another as the crisis has deepened. The countries have quarrelled, and as long as that continues, "the collective action needed to defend the euro will remain impossible."
Catastrophe is possible. A country could leave the euro. European banks may lose any semblance of confidence,. Italy or Spain may be unable to borrow at reasonable rates. An austere government like the next Greek one may be thrown out by a populist one that refuses to honor debt agreements.
Such ominous events could put the EU single market in danger. Carr thinks the worst is possible but unlikely, since the dire consequences help people see reason. Yet Carr notes, "Europe’s nations are at loggerheads, Germany is in a state of outrage, and the link between the euro and the nation state is more fraught than ever."
To avoid an abyss, Carr reckoins that the large EU members "submit themselves to radical polit5ical, social and economic reform." Carr thinks such changes will be difficult indeed to accomplish.
-- Summarized from:
http://www.economist.com/node/21536872 [this link has graphics as well as further links to related detailed articles about the euro and European banking]
Carr notes that the European Union has less indebtedness than America and can fortify its banks – but a convincing plan to rescue the Euro has not been put forth; instead stopgap measures have followed one another as the crisis has deepened. The countries have quarrelled, and as long as that continues, "the collective action needed to defend the euro will remain impossible."
Catastrophe is possible. A country could leave the euro. European banks may lose any semblance of confidence,. Italy or Spain may be unable to borrow at reasonable rates. An austere government like the next Greek one may be thrown out by a populist one that refuses to honor debt agreements.
Such ominous events could put the EU single market in danger. Carr thinks the worst is possible but unlikely, since the dire consequences help people see reason. Yet Carr notes, "Europe’s nations are at loggerheads, Germany is in a state of outrage, and the link between the euro and the nation state is more fraught than ever."
To avoid an abyss, Carr reckoins that the large EU members "submit themselves to radical polit5ical, social and economic reform." Carr thinks such changes will be difficult indeed to accomplish.
-- Summarized from:
http://www.economist.com/node/21536872 [this link has graphics as well as further links to related detailed articles about the euro and European banking]
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