January 12th, 2012
“If the joint account in the restaurant by the number of diners shares, then each ordered lobster and beef tenderloin.”Everywhere in Europe, the credit-financed party ends. The financial hangover is large, economic disillusionment is spreading in Southern Europe more than anywhere else.The decades of life on credit is over. More and more states stagger on the financial precipice. Some, like Greece, have already crashed. The virus of the financial crisis has mutated into a sovereign debt crisis. Banks seem epidemic. Some of them shake again. The policy has the issue of action is no longer in their hands. Hectic activity does not change anything. From the ECB has become a repair shop. She holds the financial load in emergency running. A recovery is only possible if there is attached to the cause of the problem, the free rider behavior. In fact, the policy is in rescue mode. So the crash is inevitable. The “old” € is history.
EMU wobbles because the members are in debt up to his ears. The sweet poison of the debt had competitive risks and side effects. Above all, the international competitiveness of PIIGS took damage. The reasons for the excessive debt are varied. Almost always, however, is “moral hazard” in the game. There are many incentives in democracies, live at the expense of others. An important driver is the welfare state. Risk-averse individuals asking the goods, “Social Security” and “social justice” after. Create in Europe PAYG systems of social security and tax-financed redistribution sustainable incentives to “moral hazard”. An exploitation is inevitable for all by all. The losers are the weakest. Increasing burden of taxes and levies to deceive the policy growing loan financing. The losers are future generations.
The ever-increasing national debt has not only inter-personal and inter-generative roots. Take a long time in Europe, with each region financially sustainable footboard, some more than others. An improvement is in sight. In many European countries, the regions responsible for their debts to each other. It is the youth-movement principle. The incentives of smaller regions, more financially exploit are particularly pronounced. It is no coincidence that the recipient countries are systematically more indebted to harmful incentive systems of financial compensation as the donor countries. Discouraging examples in this country are Berlin, Bremen and the Saarland. The national debt is there, but less pronounced, where regions can not unconditionally rely on others, but even primarily liable for its debts. An example of a anreizverträglichere solution exists in Switzerland between the Federation and the cantons.
The final push
Previously received public debt in the financial crisis. The State attempted to counter the economic slump with expansionary fiscal policy. Almost everywhere on the public debt rose. With “moral hazard” that has little to do. Excessive free-rider behavior is certainly a driving force of national and European rescue packages for the financial sector. From the debts of the banks were huge in many countries, partly unsustainable debt of the state. This dangerous trend has its origin in the “moral hazard” of banks. The certainty of “systemically important” banks to be rescued just in case the government has distorted their risk behavior over time. Banks live at the expense of current and future taxpayers. This development is to stop to get to the debt crisis under control.