November 1st, 2011
The European Monetary Union is still in heavy seas. The damaged Greece, Ireland and Portugal have taken refuge under the multi-billion dollar bailout. The politically torn Belgium, Spain and the notoriously crusty economically strapped financially Italy could follow soon. Widen the national debt crises, presents itself sooner or later the question: Who rescues the rescuers? The citizens of the rescuers show their governments in elections more often the yellow card.This also makes the bureaucrats in Brussels have doubts about their bicycle theory. The euro is increasingly becoming the explosive device for integration into Europe.
What went wrong with the project of a common currency in Europe? The fathers of the euro suspected that would be the national debt is the Achilles' heel. A Stability and Growth Pact and the mutual liability of the members should prevent the States propose fiscally over the traces. It was not so much the fear of public debt crises that could lead to unstable financial situation in Europe. Rather dominated, especially in Germany, the fear that the European Central Bank to monetize government debt and inflation in Europe running out of control. Would
Fact, the policy has blatantly violated these rules. The Stability and Growth Pact by Germany and France were drawn early on the teeth. The public debt continued to rise cheerfully. The fiscal meltdown experienced members of the EMU, however, in the global financial crisis. Major financial institutions found themselves in a financial crisis of survival. In her desperation, she took the states financially hostage. This fueled the debt crisis, especially peripheral members. Without much ado in the May 2010 crisis, the no-bail-out clause was repealed. The monetary union was a transfer union.
Fiscal crisis is the core of the EMU. Sustainable success in fighting fires occur only if the states are fiscally and financially to the banks down the chain. Insolvency regimes are necessary for states and “systemically important” financial institutions. Currently, the fire can only delete if government debt to be restructured. Debtors and creditors must shoulder the burden. Tough government austerity programs and deregulated markets, strengthen international competitiveness. A significant participation of creditors in the restructuring of the ailing countries reduce their loads.
Politics has learned nothing. She is ready with regard to the banks not to go this way. She still wants to put out fires with gasoline. The leaning tower is intended to stabilize government debt with new debt. Larger parachutes and soon Euro Bonds have fatal consequences. The recipients will receive no real help for self help, moral hazard is fiscal floodgates opened. But the ever-smaller number of donors falls to lurch financially. The pressure on the ECB to take to break the vicious circle with a more expansionary monetary policy. Devil with Beelzebub would be expelled.
However, where danger is, grows the saving power also. It would be an irony of history if the rescue would come from the political markets. The resistance in the donor countries for transfers to insolvent banks lurching States and is increasing. More and more voters are turning away from the established parties. Euro skeptic parties springing up like mushrooms. This development, however, is highly dangerous. The fight against a transfer union in Europe is also out protectionist. So stand again in Europe, the four basic freedoms are at stake. It is high time to stop the transfer of political madness of the EMU.