When politicians do not know what to do, they hold a summit in the hope that the noise will be mistaken for action and the publicity of the event will mask the lack of ideas generated by it. The present meetings and statements about the crisis that is affecting Greece and the Euro is a case in point. There are no ideas except that the Greeks must make huge sacrifices to repay their debts. (more…)
It is odd how many people, companies, organisations and governments allow belief to prevail over reality. A problem can be staring you in the face but sometimes belief overwhelms reality and you do not recognise the problem, or, if belief allows you to recognise the problem, it fails to allow you to recognise the solution. Belief is a matter of feeling and reality is a matter of fact. Your beliefs may prevail where the facts are unknown or indistinct but if you allow belief to oeverwhel reality byou will make wrong decisions and ultimately come to a sticky end.
A good example of belief prevailing over reality is what is happening in the Eurozone. Governments, officials and policy makers are allowing their belief that the euro is a good thing for Europe to prevail over the reality that for many parts of the Eursozone the Euro is a bad thing.
I do not think that the Euro will survive for long as the national currency of twenty seven nations, each with very different habits and expectations. To believe that the euro will survive is to allow belief to prevail over reality.Such is the nature of wishful thinking.
Over the past few weeks governments have been grappling with the financial crisis in the Eurozone. Governments can only justify their existence if their rationale is to protect the people they govern and ensure that those people are safe, free and can pursue their dreams. The problems of the euro, with Greece, Italy, Spain and Portugal all approaching insolvency, seem to be beyond the solution of governments. The intense work that governments have undertaken over so many months to “save” the euro has not provided a solution and it is unlikely that the present plans will provide a solution.
If you cannot solve a problem then you have to live with it and suffer the consequences. The consequences of not being able to protect the euro, the banks that lent to some nations, and ultimately the dream of a united Europe may be drastic, but consequences of spending time and energy in trying to fix the unfixable are worse. Better to spend the energy and time in fixing what we can fix.
The markets have not yet thought about it, but the biggest threat to the Euro is not Greece, Ireland or Portugal, but the dangers posed by the fourth largest economy in Europe, which is also the third largest in the Eurozone, that of Italy. Italy is passing austerity measures but the measures may not be enough. The problem that the Euro faces is that there is little central control over the EU economy, control that exists affects states within Europe that have not adopted the Euro, as well as those that have. (more…)
I wish I owned a bank based in the Eurozone. If I did I would do what some European banks are doing. Iain Dey, Deputy Business Editor of the Observer described their cunning plan in his column on Sunday. This is what it is. (more…)