Why Greek Tumult Signals the Coming of Europe’s Own ‚Arab Spring‘

Date: 21-06-2011
Source: TIME

Are the youth-led protests rocking Greece and other European countries a sign Arab Spring uprisings have jumped the Mediterranean? Kinda-sorta, say experts watching these movements. They warn that even if democratic systems in Europe can’t be compared with the brutally authoritarian  regimes under fire in the Arab world, the angry youth on both sides of the Mediterranean share a conviction that existing social structures–and the leaders responsible for them–are simply unable to deliver on their people’s aspirations. Getting ahead through playing by the system’s rules has become an increasingly remote possibility for many young Europeans, and the result is a growing risk that the explosion of anger on Greece’s streets this week will be repeated and with greater intensity, both there and elsewhere.

Some EU Statistics

Erfreulicherweise liegt Österreich überall mit vorne.

How the Euro Became Europe’s Greatest Threat

Date: 20-06-2011
Source: SPIEGEL

In the past 14 months, politicians in the euro-zone nations have adopted one bailout package after the next. But they have been ignoring an inconvenient truth: that the euro cannot continue as before.

The headline on the cover of this week’s issue of DER SPIEGEL reads: „Suddenly and Expectedly: An Obituary for a Common Currency“.

The euro is becoming an ever greater threat to Europe’s common future. The currency union chains together economies that are simply incompatible. Politicians approve one bailout package after the other and, in doing so, have set down a dangerous path that could burden Europeans for generations to come and set the EU back by decades.

In the past 14 months, politicians in the euro-zone nations have adopted one bailout package after the next, convening for hectic summit meetings, wrangling over lazy compromises and building up risks of gigantic dimensions.

For just as long, they have been avoiding an important conclusion, namely that things cannot continue this way. The old euro no longer exists in its intended form, and the European Monetary Union isn’t working. We need a Plan B.

External versus Domestic Debt in the Euro Crisis

CEPS, Daniel Gros. 25/5

As EU leaders muddle through the eurozone crisis, the debate about its root causes continues. CEPS Director Daniel Gros argues in this Policy Brief that the debate is important if we are to understand how to prevent future crises. In his view, external debt is the key to the turmoil in European economies and that the focus on total public debt is therefore misleading.

… My argument that foreign debt is more important than public debt has a number of implications for the ongoing eurozone crisis:
• Ireland, which is on course to run a currentaccount surplus this year and which has an overall small net international debtor position (about 20% of GDP) should be able to withstand the crisis much more easily than
countries like Portugal or Greece which are still running sizeable current-account deficits and which have very large net international debtor positions (about 100% of GDP).
• It might be more important for Greece (and Portugal) to achieve an external (currentaccount) surplus than a fiscal (primary) surplus.
• In order to restore the creditworthiness of a country policymakers need to cut its foreign debt, not just public debt in general.

How Sweden Steered Clear of the Greece Fiasco

Date: 20-06-2011
Source: BusinessWeek

The case for national sovereignty: By staying out of the euro, the Swedes have steered clear of Greece’s mess. Brussels, take note

They are taking to the streets in Stockholm, but not with demands. Swedes, this month, ask for no more than a spare patch of grass or dockside granite to bask in the midsummer. The country has never really gone in for protest anyway, and right now there’s nothing to protest about. The economy grew at an annual rate of 6.4 percent in the first quarter, after 5.7 percent last year, which was the strongest recovery in the European Union. And Sweden still has its krona.

Though it joined the union in 1995, Sweden never adopted the euro. It still enjoys the advantages of a tariff-free common market. It sends ministers, commissioners, and members of parliament to Brussels and Strasbourg. And right now, Swedes are looking south with relief. While Sweden enjoys monetary independence, Germany—another strong exporter with high-end manufacturing and solid growth—shoulders responsibility for saving Greece and preventing a wider financial collapse among the 16 other countries that use the euro. On June 13, Standard & Poor’s gave Greece the world’s lowest credit rating, while Greece’s debt load reached 143% of gross domestic product, the highest in Europe. Sweden’s krona has joined the Swiss franc as a favored currency for traders looking to profit from Germany’s expansion while avoiding the European debt crisis. „If you are buying the Swedish krona,“ says Nick Parsons, head of markets strategy in London at National Australia Bank, „you are getting European growth without Greek politics.“