segunda-feira, 6 de dezembro de 2010
TEc asks "Will the Euro-zone break up?" - A disturbing question whose answer defies prognosis
It is troubling enough that we should have this question asked.More so to realize that as I vote one third of respondents agree a break-up will come about.Much has been said and written on Euro-zone woes since the beginning of 2010. So many the delays, dithering and apparently contradictory moves by European politicians that a learned comment is not easy to construct.Especially one that does not mix wishful thought with pragmatic evidence.
However, taking after every in-depth analysis made by reputed economists and The Economist it would seem that the case to keep the Euro-16 is one of the lesser evil.
Perhaps unsurprisingly this applies to countries/economies on far ends of Euro-zone.
The single currency was never meant to arrive at such a critical crossroads.
It may now sound academic but I still cannot quite figure out whether Euro designers did not think through every weakness that might eventually undermine the currency.(!?)
On the other hand - should a country leave the Euro to regain competitiveness - I have always believed currency devaluation to be nothing but a quick fix.
It does not address core problems or force governments/private sector to plan and implement medium-to-long-term development/company policies to prop up and strengthen an economy lastingly.It is very much the opposite, an easy exit route likely to make weaker an already weak economy in the longer run.
Anyhow the stakes are too high that even the best analysis look constrained when not stone-walled by a powerful political/economic/social combination.
To my mind summing it all up it would appear that the case to make Euro-zone work is by far the stronger one.
Contemplating its downfall is indeed reason enough to double common efforts to undertake every institutional change that will ensure its survival.
To this effect the ECB's decisions no matter how grudgingly made are as bold as they are required.
Governments in afflicted countries now have to rise up to the tough choices and challenges.
Making the most of available time and lifelines thrown to fulfill the internal adjustments needed while pursuing economic growth as well.
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