Terça-feira, 30 de Outubro de 2012

Without internal solidarity eurozone is doomed to crumble

It is very easy to understand and you need not be an economist: when a country is in financial difficulties for paying interests required by markets it is not possible to get out of crisis simply by the obligation of drastic and sudden budget cuts, reducing and pushing thousands of companies that work for internal market to the failure, causing a lot of thousands of unemployed people. This also means to reduce taxes received from companies and workers. Employment must be safeguarded as much as possible. Necessary cuts must be very criterious and avoid any cuts of expenses with social security when it is more necessary and it is called up to respond to the functions for what it have been created. Healthcare, education, support on unemployment, expenses with retirements which are due to those who have contributed whole working life cannot be cut or simply reduced. Unnecessary expenses must be cut down as well as combat to corruption must become more efective. Justice must be swift and efficient that must be main tasks: A corrupt country or where justice does not work is not credible and does not promote private initiative, except if it is specially protected and with special benefits as like reduced taxes. If taxes have to be increased they must de extended to whole population and not directed to a special group or groups, so that efforts may be distributed by everyone.
Population does not have in general no responsability about the origin of the collapse, but are citizens who pay for bad governance of former governors, and often as a result of acts of corruption inside the circle of power.
The formula that is being applied for some EU countries in difficulties only delays the date of its bankruptcy that shall happen anyway. The agony shall be prolonged for some few years longer but it shall happen, because then everything will be worse than at beginning. Greater evils could has been avoided if solidarity within EU had been real and if eurobonds had been created with euro. The way as euro has been created became a trap for economical weaker countries, which have had benefit of lower interest rates at beginning but are not able to pay higher values that now are being required by markets when they realised that economies of those countries were weak and there was no real solidarity within eurozone.
Now, weaker countries, already in dificulties, should require from better condition partners of eurozone the implementation of eurobonds immediately, in order to create a real eurozone monetary. That would reduce pressure on weaker economies. If that does not happen soon these countries will have to recognize they can not pay so high interests which are being imposed them and one of two choices will have to be made: either renegociating the debt or taking those countries into misery and social chaos, anyway they shall have to continue using the euro once they have no other currency now and they would have to pay to create a new one. The alternative would be the richest ones create themselves a new currency and leave the euro, but does it make the weaker countries pay theirs debts now?

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publicado por Zé da Burra o Alentejano às 21:22
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