The relativity of European Political Time Pitikaris Theodoros BAB,BSc,MSc

While Markets are crying for immediate action, European Leaders seems unnatural calm, they talk, discuss, debate, negotiate and the end up with debt management treaties that are complicated, inefficient, unfair and unrealistic. When they realize that what agreed is not feasible the start again talks, debates, negotiations. The truth is that, until the election in France and Germany, the national interest comes first, while the European vision comes second. Angela Merkel and Nikola Sarkozy have to satisfy, with their political agent the body of voters in the forthcoming elections, and that is an difficult task taking into account the Economic reality in both countries. The other problem, comes from people, voters that are misinformed about the reasons of economic failure of south and they are tempting from populist politicians and newspapers that accuse the Lazy South and the foreigners for all the bad things that the nation suffers. The only constant variable in this multidimensional equilibrium is Mr ECB Jean-Claude Trichet. He has by the regulation of ECB, to put as primary to keep inflation under 2%. That is something not decided by Trichet or ECB but EU leaders, and ratified by EU member states parliaments. But even he has to face this limitation; he decided to overrule the ECB regulation in order to buy time for politics and politicians. ECB is not allowed to buy directly from the government bonds, so the triangle finance method is followed at the time being to flow liquidity towards the weaker member states of Eurozone. There are many assumptions about the future of Eurozone. Some analyst believes that Germany will get out for Euro and will reinstitute of DM as national currency. According to my opinion Germany will not kill Eurozone for several reason: firstly still Eurozone countries have mutual profit from their participation in Eurozone, secondly the opposition in Germany (SPD and Green Party) that has already gain relative majority in the body of voters. SPD has a very provoke attitude towards a political solution of debt crisis. Furthermore the political future of( FDP_ Free Democratic Party, the political party that force the Government of Germany to adopt the austerity policy as catharsis measure, for the Naughty guys at South, is uncertain. At the same time Mr. Guido Westerwelle, the hardcore new-liberalist politician is now off from the FDP leadership. The secession of Germany will cause a huge Trade Gab deficit since the EU countries will follow UK policy, by drastically devaluate their currency against dollar and DM, it will be a real devastation for the whole world the uncoordinated devolution of Eurozone. Not to say about the political cost of this action. The political change in Germany and France will change the political Agenda of Eurozone. In addition the new president of ECB mr. Mario Draghi, is very familiar with the economic reality of South as Mr. Barozo is.

European Union has faced worst situations, the lack of Leadership in obvious but as the political changing is on the way. Nevertheless the situation is quiet complicated, for instance the socialists had been forced to apply the most extreme new-liberalism measures while even the parties that belong on the same ideological area, proclaim different policies to overcome the depression, for instance Portuguese new government goes for the biggest austerity package in history, on the contrary Hellenic
Conservative Party prefers to reboot the economy and stimulate the development by reducing the indirect taxes, and taxes on corporate earnings. . The real problem of Europe is concentrated in the fact after the collapse of the procedure towards a European Constitution, Europe lack common political Agenda and Vision. But that is Europe talk, negations, blackmails, treaties at the end always the procedure, even slow, end up with functional and realistic result. The markets, have to wait, Europe doesnt take decisions on harry, actually even the markets are struggling for action, politics believe that there is a lot of time available. Under this conception does not cause questioning the collapse of Greece Troika negotiations yesterday. Furthermore If we check Eurozone in macroeconomic prospects things are not bad at all and at the time being euro is considered as one of most reliable currency from the Money markets ( 1 euro=1,42$). No rush guys.here is Europe

Furthermore in UK that the Government controls the Bank of England, the monetary expansion, didn't help the economic growth. On the contrary, even the devaluation of pound, and the strong austerity measures were not enough to defeat the deficits and depression. The worse, for England is that he has not anymore the magician of economics Gordon Brown, to handle the forthcoming social and economic crisis.

Wilfred about y the point [a] we have already agreed, about the necessity of a band bank for national debts, as far the second point I am not sure how that will work...I mean it seems closer to communist perception about the regulation of the economy and the bargain power of the state. As you may realize I have just reading your book so I havent a full understanding of your proposal.

If I am correct you propose a global monetary loosen... and new channels for governments to bypass the banking system, and fund directly the real economy... The problem is that we need to be sure that this money will at least improve the productivity in order cover the productivity gap and reduce the unemployment level. But still what will be the consequences if a country employs dumping policies to boost the exports? How this will affect the behavior of the other governments? Is it possible to go in vicious circle of devaluation?