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Lisboa, Portugal
Nasci no dia 11 de Junho de 1964 na cidade da Beira, MOÇAMBIQUE.

A Estação dos CFM, Beira

A Estação dos CFM, Beira
Ex-libris da cidade, 1966

The Euro, as a single currency, should be abolished

Another black and white motion statement leaving me no option but to choose No.
While I agree to the first part I am not prepared to contemplate the idea that the Euro should get abolished.
Abolished? Then what?
All 17 countries now sharing the single currency would revert back to their old monies?
Or a new version of yesteryear's currencies?

Simplistic as I made it out to be packed in a few odd questions, every single serious economic, financial and social consequence is inextricably wrapped up within each.
That is where the stakes are high enough to ensure that the Euro is given a new lease on life.
It calls for closer European integration.
What form and shape this will take is for policymakers and far-sighted politicians to grasp and propose.

It would seem to me that the Euro has many underlying strengths but will not - contrary to the founder's beliefs - assure convergence between all the economies it services. How could it?
The divide has been felt acutely lately (1-2 years) the logical consequence of relevant economic under-performance among member-countries.

There has obviously got to be a political solution rooted in realistic economic fundamentals.
The road traveled so far proved artificially smooth during the first 10 years I dare say but unsurprisingly very bumpy in the last 1-2.
It could not have been otherwise given the structural differences setting these countries apart. And excessive spending pursued mostly by a few Southern European States who could not see beyond the present.
Adherence to the Maastricht criteria never again seemed to be taken seriously once countries landed themselves inside the Euro club. Not to mention Greece that never fulfilled the criteria in the first place or ever bothered to balance its books.

Very disappointing to admit but the Euro Zone is indeed right in the middle of a storm testing its main crews to the limit.
The latest summit decisions seem to indicate that where there is a will there is a way.
It may have just been one first small step in the right direction.

The specifics are very hard to work on.
Yet it would seem to me that the 17-member Euro Zone and the larger EU can hardly afford shooting down the Euro.
The broader picture needs to come into full view.
An hypothetical demise of the single currency would deal another severe blow to Europe's economic fortunes.
Its relative decline vis-a-vis the rest of the world would get a further boost.

I do not like misplaced calls for solidarity from Southerners but would rather see the stronger half of the dividing line realize where their medium-to-long interest lies.
To that end many balances across the Euro Zone need to be restored at the earliest.

Europe agrees a "shock and awe" bailout for Greece

A rescue package of epic proportions, epic challenges for the Greek government and people, epic uncertainties and epic stakes for the single-currency.

It was the Euro's defence that ultimately forced politicians from Germany to Malta to perform a hard balancing act whose overall success is far from assured.Each finance minister has enough reasons to fret and grumble about.It being the Euro as a common currency, because of Greece despite Greece.
Up to now every 'least damaging' approach failed miserably to cool down the financial markets that remained as unimpressed as ever throughout.
For its part Greece is effectively the main winner in this high-finance gamble.The country bought time the markets were not willing to give it once confidence vanished.Precious time desperately needed to restore credibility and good governance at home.
A daunting internal fix with daunting external implications.
Three full years is what the government and Greek society top-down and bottom-up now have to set the record straight in so many ways.
Literally and figuratively.

For the other 15 Eurozone countries - each facing own troubles to varying degrees - keeping fingers crossed would be mild to describe the monitoring of Greece's performance over the coming 36 months.Potentially they are all losers, starting out by losing simply to avoid bigger losses!
There are so many relevant questions that might be asked to which full answers ought to be provided.
They won't get asked or get answered.
Tellingly, each and every single one of them would now seem rhetorical or at best an exercise for academia.



The spectre that haunts Europe

I am still hopeful that Greece will not require a bail-out in whatever form pinning my hopes on the PM's own words.

He did sound very bold and brave in the face of such overwhelming odds but until a deal is actually in place I would rather believe the Greeks can and will take care of themselves.

My stance is wholly based not on immediate needs triggered by the Western financial meltdown that led to the economic downturn.This in turn led to a collapse in tax revenues across countries caused by economies shrinking badly.

To a large extent Greece is indeed a one-off case-study for the worst reasons, its latest fiscal deficit the sum total of profligate spending, widespread cultural-rooted tax evasion, underbudgeting, creative accounting, weak notion of public service and duty, etc - all conspiring over decades to bring the country to the brink of bankruptcy.

I am sure many Greeks will have seen it coming and warned their governments in years past.To no avail as even the present government was elected as recently as late 2009 on a platform to increase spending.

According to EMU rules public finances were clearly to remain national responsibilities.A considerable chunk of sovereignty for States to manage through their democratically-elected governments of the day.
Would the Greeks have liked their Finance Ministry to be ruled or dictated to from Brussels or Frankfurt just so the Maastricht-agreed criteria could not have been so despondently ignored?


Current turmoil is the Euro's hardest test ever but one that will also represent a defining moment in the single-currency's future.

It is a fact that Southern European countries are faced with similar issues though not on the same scale and urgency.Others in Northern Europe, the US and Japan also recorded their biggest fiscal deficits and added up noticeably to their debts in 2009.
Each one has its own track-record, however.
This is exactly what sets Greece apart from the rest.
Each country is unique in its own way, there being obviously overlapping between them.

International rating agencies must make the effort to closely monitor and register those differences and then advise financial markets.

After all it is sovereign countries and sovereign debt one is dealing with.

There is much more at stake than strictly soulless bundling of nations.







Arquivo do blogue

quinta-feira, 29 de janeiro de 2015

FT - The stand-off that may sink the Euro - Syriza's wake-up call


Philip Stephens holds a very moderate and sensible view of Eurozone's unaddressed woes seen in light of the political process. There's hard evidence all over, gained from traction following 4/5 years of dealing with a financial/economic/social/cultural European crisis that has effectively derailed the EU. Words may be easy to flow to describe what has happened, why, who, where and how best to resolve but at the end of every single day since the outset of a predictably messy affair there remained stubborn unwillingness to do what it takes. 

That said, there have been some real developments few and far between. The latest and single most important one being the ECB's QE program which has already folded elsewhere. QE produced clear outcomes particularly in the US and the UK but will it work in a 19-member monetary bloc with such a diverse set of economies and societies?

Indeed, every structural option available is known to the few who can choose from them except that they won't use them for whatever reason.
Beyond the events of the day from Berlin to Athens, the future of the EU and the Eurozone as its boldest experiment is still uncertain. 

A political and economic bloc that is unresponsive to large sections of citizens in many countries for opposing arguments is surely threatened from within.

National governments should always get their act together.
The supranational EU institutions in the making too with stronger countries adopting much broader latitude in their approach to ongoing problems.
Obviously both should go first!

quarta-feira, 28 de janeiro de 2015

FT - The Euro - gains for Germany, brought unimaginable pains to Greece


The closing line is wholly unwarranted. If anything Germany is the one Eurozone country that has benefited the most from the advent of the single currency. 
In actual fact German companies and the products they make were quick to tap into every single one of the EU's 27 markets from a position of strength. The ever larger single market created more consumers to sell their goods to. Within the now 19-member Eurozone the Euro further improved gains for the region's leading economy.
On balance, no matter the liabilities that Germany has taken on - largely overblown in the German public's perception - the country added up to internal strengths and national wealth. 
The European Union was supposed to be a bloc of sovereign States pooling some of their former internal power for the greater advantage of all. It would never be easy to get such a diverse set of countries and societies to work together gainfully. Yet that remains the single most important challenge that needs fulfilling. Indeed the only one that objectively justifies the existence of a European Union in the first place. 
From Germany to Greece, people must grasp in their daily lives that the EU works for them despite every shortcoming and failure of each national government. Unfortunately this has not been the case to the extent that far too many citizens across Europe feel deeply disillusioned with the current workings of a dysfunctional economic union unable or unwilling to bring meaningful hope to Main Street across every capital.
Greece has to reform its society as much as Germany needs to review its hardened stance on the common monetary area, stress put on 'common'. There is now some traction and experience to go by of the path pursued thus far and outcomes produced. If anything they show there has got to be a new approach of some sort...

domingo, 25 de janeiro de 2015

TEc - The day after - ECB steps out of the closet to boldly put cash on the table


The ECB has acted to ultimately kickstart the Eurozone's floundering economy picking its own timing to do so.
It is not at all clear how the new approach will improve the plight of the real economy. Checking deflationary pressure while seeking to take inflation up to the upper bound of 2% has got to translate into a better economic context for companies at large.
Unlike the Eurozone QE was timely applied both in the US and the UK.It may now be acknowledged that it played no small part boosting growth there. In Japan outcomes have been mixed but the country faces a different set of challenges calling for Japan-specific answers to them.
The Eurozone faces a very difficult uphill struggle to resume meaningful growth to a widely-varied set of diverging economies and societies. The aftershocks of the financial crisis proved to be - rather unsurprisingly - deeply asymmetrical leaving Germany to benefit from them early on while other countries took the pain one after the other especially in Southern Europe.
Perhaps a new time is now dawning in the EU - funny coincidence(?) the announcement was made only days before Greece's landmark general election - whereby the European Central Bank takes center stage deciding monetary policy and the tools to pursue it.
National politics in each member-State may also acquire a higher profile, with Greece leading the way.