The hot topic of everyone in the United Kingdom is Europe. You either love it, or loathe it, but whatever your opinion on it is, you know it isn’t currently running as smoothly as it was 5 years ago in the boom times. Every politician is trying to gain from the demise of this centralised beast, with euroscepticism being the new popular vote. But what the people really want is not to be told what people in office around Europe are going to do – to sort out the vast mess of Greece,Spain,Italy and the rest of the eurozone states – but instead the people want to see action being taken. Enough truly is enough for the people of Europe.
We have seen countless multi-billion euro bailouts to countries across the eurozone, and the daily news of record high unemployment and failing eurozone countries is beginning to become something of the norm. But it really doesn’t have to be. Currently the only measures that Brussels has been able to do is throw money at the failing countries, print more, increase debt and hope that it will cure the state’s deep rooted fiscal and monetary problems. But clearly this tactic of increasing the debt to solve a problem caused by debt is not working, Greece’s economy is still producing little signs of recovery, with youth unemployment currently standing at 55%. This shows, to the financial world, that they have not sorted out their problems, and no one under the sun would dare to touch Greece, no one will invest until they take real fiscal and monetary action. Until Brussels manages to get the international markets on the eurozone’s side, this problem will continue, and the snowball effect will keep on rolling on.
The eurozone has two realistic actions which it could take, actions which would please not only the people of Europe but the international community that the eurozone is being sorted, and investment can get underway again. Currently the bond yields are at record levels, countries such as Spain has seen its bond yield rate increase from 4% in 2009 to 6% in 2012, hardly displaying any trust. Trust is key to any long-term plan.
The first action has the ability to please both people on the right and left. This action is setting up a second tier system for weaker states, such as the likes of Spain, Italy and Cyprus, which allows the more powerful states to expand, such as France and most crucially Germany. This would permit the concept of a common market and a shared currency to still take place, but would not drag down and weaken more powerful countries. Germany is presently being weakened by the failing eurozone states, and without Germany, this whole eurozone concept will buckle. Having a second tier system will please the right as it frees up the common market, it stops the weaker economies from dragging down successful states. Not only does it allow economic activity to increase, but it allows states to rebuild, as fewer countries using the currency will increase its value allowing countries to have some sort of foundation to work off. But this will take time, and time in this case, really does mean money, jobs and the livelihood of many citizens.
The second, and far more popular to public opinion is to merely dissolve the eurozone completely, buckling to the pressure of many movements in Europe, from the far-right to the far-left, but still giving clear action to the international community. Of course it would take years for countries to rebuild from the inevitable crash it’ll cause, but is it not better to get the inevitable out the way, allowing countries to be empowered? Allowing them to take control of their own finances, fiscal and monetary? This is what will lower the monstrous debt and unemployment, not throwing yet more ‘fake’ money at a black hole. This is the action which leaders are completely scared about, but the public isn’t. People inGreecebeing forced to live on the streets because of the eurozone, why on earth will they want to trust the eurozone to sort out the mess they originally created?
The main problem with this destructive plan is the political implications it will have. The complex situation of the eurozone asks: is it actually possible? Or will the people of say Spain, protesting in the streets, have to wait for the currency to completely crumble till they get to leave the eurozone? I fear this situation far more than a controlled destruction of the eurozone.
But these action plans are being completely ignored, Cyprus was the latest state to buckle under the pressure of the eurozone, being forced to ask for a 16 to 17 billion euro bailout. This is clear evidence that the current status quo is not working, and the bureaucrats in Brussels have not learnt a single thing. They are trying to mix cuts and spending, which only leaves the country in a bigger mess than before the financial action was taken.
I believe sooner than later, the leaders of Europe will have to face the reality, and actually start taking realistic action to sort this mess out. The people cannot wait much longer, but more importantly, the economy globally and nationally cannot wait. Everyone is calling out for long-term actions, but someone needs to be brave enough to stand-up and deliver what is right for the 17 member states in the eurozone.