German Chancellor Angela Merkel is running out of allies in her drive to solve
the euro debt crisis through strict austerity programs. French Socialist
François Hollande looks on course to oust President Nicolas Sarkozy, who has
been Merkel's most important partner in the fight to overcome the debt crisis,
in a run-off vote on May 6 after beating him into second place in the first
round on Sunday. And Dutch Prime Minister Mark Rutte, whose minority government
has been lecturing Greece and other high-debt countries about the need for
strict spending cuts, resigned on Monday after the far-right Freedom Party of
populist Geert Wilders refused to back budget cuts for the Netherlands, regarded
as one of the most stable economies in Europe. Across Europe, right-wing
populists are on the rise, winning votes from ordinary people disenchanted with
cuts that have been making their lives harder. In France, the National Front of
Marine Le Pen won 17.9 percent on Sunday, the highest result a far-right
candidate has ever managed in France. Stock markets across Europe fell sharply
on Monday, particularly in response to the collapse of the Dutch government. The
political turmoil in the Netherlands has sent a disastrous message that could
thwart Merkel's master plan to save the single currency. If the Dutch with their
robust economy aren't willing to observe the 15-year-old rule limiting the
budget deficit to 3 percent of GDP, many are asking, why should other nations
such as Greece, Spain, Portugal and Italy, which have far bigger economic
problems?....As long as our brilliant governments put VAT on static caravans and
hot pastries, thats the important thing. We can't have those lovely people in
the EUSSR going without their private schools, chauffeur driven limos and 3 hr
lunches with vintage wine!
Access Investments-Building Awareness - European Union-ROMANIA
Wednesday, April 25, 2012
German Chancellor Angela Merkel is running out of allies in her drive to solve
the euro debt crisis through strict austerity programs. French Socialist
François Hollande looks on course to oust President Nicolas Sarkozy, who has
been Merkel's most important partner in the fight to overcome the debt crisis,
in a run-off vote on May 6 after beating him into second place in the first
round on Sunday. And Dutch Prime Minister Mark Rutte, whose minority government
has been lecturing Greece and other high-debt countries about the need for
strict spending cuts, resigned on Monday after the far-right Freedom Party of
populist Geert Wilders refused to back budget cuts for the Netherlands, regarded
as one of the most stable economies in Europe. Across Europe, right-wing
populists are on the rise, winning votes from ordinary people disenchanted with
cuts that have been making their lives harder. In France, the National Front of
Marine Le Pen won 17.9 percent on Sunday, the highest result a far-right
candidate has ever managed in France. Stock markets across Europe fell sharply
on Monday, particularly in response to the collapse of the Dutch government. The
political turmoil in the Netherlands has sent a disastrous message that could
thwart Merkel's master plan to save the single currency. If the Dutch with their
robust economy aren't willing to observe the 15-year-old rule limiting the
budget deficit to 3 percent of GDP, many are asking, why should other nations
such as Greece, Spain, Portugal and Italy, which have far bigger economic
problems?....As long as our brilliant governments put VAT on static caravans and
hot pastries, thats the important thing. We can't have those lovely people in
the EUSSR going without their private schools, chauffeur driven limos and 3 hr
lunches with vintage wine!
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The Dutch far-right leader Geert Wilders said the cuts were unnecessary and would be bad for the Netherlands.
The message was repeated in Spain. Treasury minister Cristobal Montoro told parliament: "We are in an extremely delicate moment as a country, an extremely fragile moment as a country [...] This is the most austere budget since democracy, and it is aimed at being the most realistic that Spain needs to overcome this crisis situation."
Meanwhile, George Provopoulos, head of the Bank of Greece, said the country must stick to its spending cuts, regardless of the outcome of elections on May 6, or risk being forced out of the eurozone. He said: "If following the election, doubts emerge about the new government and society's will to implement the programme, the current favourable prospects will reverse."
But the president of Germany's influential Ifo economics institute said Greece should quit the euro. Speaking in New York Hans Werner Sinn said: "I personally believe there's no chance for Greece to become competitive [while] in the eurozone."
Europe Struggles With Deficit Cures
A pledge by European Union governments to bring their budget deficits back in line with EU rules by end 2013 is causing economic pain and discontent.
Spain's banks are widely regarded as time bombs, with portfolios of volatile loans on their balance sheets that could explode at any time. The country is sliding deeper into recession and international financial investors are slowly but surely withdrawing. Last week, the government in Madrid succeeded in selling new bonds on the markets. But the yields for these 10-year sovereign bonds are currently running at a crisis level of roughly 6 percent.
The fate of the monetary union currently depends on Spain's austerity policies. The experts in Brussels are convinced that if the country seeks aid from the rescue package, the crisis will reach the next escalation stage.
The danger is real. Indeed, since the current Spanish government took office four months ago, it's proven more adept at upsetting its European partners than at solving its financial problems. Many observers say that the latest escalation in the crisis was sparked when Spanish Prime Minister Mariano Rajoy announced that he did not intend to adhere to EU austerity rules. "That's the perfect way to scare off investors," said an official in the German Finance Ministry in Berlin.
Since then, officials in Brussels have been saying that Spain isn't expressing enough serious interest in cutting costs. According to the plans put forward by the government in Madrid, public expenditures will rise by 2 percent this year alone, taxes will only be moderately increased and Rajoy doesn't even intend to reduce the public sector workforce. There's quite a lot of "fat" in Spain's public sector, as European Commission President Barroso often complains in small circles.
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