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Greek crisis to crash Eurozone utopia?
Published: 16 April, 2010, 23:19
Edited: 19 April, 2010, 02:13
The eurozone’s secret is that its pockets are a little dusty. It could print or borrow the cash to bail out Greece and but it knows that would not be the end of it.
Germany couldn´t have "much lower" interest rates out of the Euro as ECB´s interest rates are already next to 0. So that doesn´t makes sense. Really, what is happening in Greece means a managed devaluation of the Euro as it was too much strong fro Eurozone (and specially German) exports. The Eurozone means Market for German exports that in no way they are going to leave. They have the guarantee that Eurozone member state will not devalue their currencies so German exports will continue to be competitive intra-Eurozone. The problem comes extra-Eurozone as China´s yuan is pegged to the USD, so once inflation in the Eurozone is just 1%, half the U.S.´s, there is room for a managed devaluation of the Euro. And, this way, Greece is doing a great job to easy exporta to the Dollarzone (which includes China) Europe doesn´t have to bear all the burden of the World economic recovery.
Whoever makes constitutions makes a horrendous mistake when they don't put strict limits on debt and deficit spending. Elected governments of even the countries with the best educated populaces just don't seem to be able to resist the urge to kick the can down the road. The way things should work is you save up money in a rainy day fund during good times, and then you spend it to shore things up during down turns. The idea that a country should be allowed to consistently rack up huge deficits and debts irregardless of economic conditions is extremely dangerous and its negative consequences are busting out moves all across the globe.