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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

sábado, 17 de maio de 2014

FT - The Eurozone won the war, now it needs to win the peace - An opinative overview

The visionary ideal of an ever closer union ultimately leading to a true European Union remains as far-fetched as ever since current woes began triggered by the financial meltdown.
While apparently the sovereign debt crisis is headed for closure where it manifested harshest, there are far more questions than answers as to the future contours of a mutually advantageous monetary union.

The Eurozone comprises 18 economies whose differences are relevant not least amongst the big 3: Germany, France and Italy - for the incoming European Commission and Parliament to take very serious note of.
And eventually adopt a new approach to the entire European edifice.

On every ground one can think of it is unacceptable to tie countries down indefinitely, leaving them to fend for themselves and yet share a single currency. A currency that objectively does not bring gains to their respective economies. 
With so many formerly readily available monetary policy tools having been removed there is no leeway left in these countries to manage their own economic cycles.

Portugal is a good case in point. The country officially exits the bailout programme today without any cautionary safety net. There are reasons to rejoice at progress made restoring external balances, reducing the size of the State, sharpening the export sector and, perhaps, making the surviving economy leaner. These gains were achieved, inevitably to a degree, at an overwhelming social cost.

For Democracy's sake it is up to politics at national and European level to do 'whatever it takes' to mend societies hit hardest.
This needs to be done concurrently with every action taken to ensure that the ECB saved Euro works to the benefit of all countries sharing it, if not equally at least tangibly to most citizens.
Prolonged economic stagnation wherever is not an option by any seasoned yardstick.

sábado, 10 de maio de 2014

TEc - One currency, divergent economies - The Euro conundrum

Now that the sovereign debt crisis appears headed for some sort of closure the time is ripe for the European Monetary Union to receive a longtime-much-needed shake-up.
The graphs show that the divergent performance of Eurozone economies is not sustainable, if ever.
The social cost of adjustment policies has been so high that one wonders what tangible steps will be taken going forward to face the consequences head on.
The EU remains at a crossroads where the gains of a handful stronger surplus economies is largely at the expense of factors directly making weaker economies more vulnerable still.
Deflation and a strong currency present formidable challenges that require urgent attention.
Even in France - the Eurozone's second biggest economy - there is growing perception that the Euro is undermining French competitiveness.
If a break-up of the single currency zone has been avoided the focus should now quickly shift to transforming the Euro into a winner for all the economies sharing it.

domingo, 4 de maio de 2014

Portugal on track to exit the bailout programme - PM informs citizens

This is good news indeed crowning three long years of blood, sweat and tears for too large a number of people.
Of course the adjustment programme - as was implemented - had its effects felt unevenly across the board.
Yet again, those hit hardest by the draconian austerity drive were those who could least afford to on far too many instances. 
It might be said that such is the logic of the system when countries/States have no money left in the kitty.
The punishing contours of invited rescuer-creditors are blind and oblivious to any existing social matters or public policies to tackle them.

Portugal's leadership should know better by now. Hopefully.
It won't take long before citizens find out if they - government and opposition - have learned anything at all.
About the country's fundamentals, excessive reliance on external finance and the huge burden of existing debt.
All capped by the Eurozone's straitjacket.
Despite many flaws in the European Monetary Union and the missing blocks of EU institutions and politics, it still rests with national governments to take good care of respective countries.
To take on internal vested interests permanently, engage with civil society and govern for the common man in the street.
Or has Democracy's original worth been entirely and irreversibly hollowed out?

Throughout the tough three-year period the government's primary concern was clearly to please the trio of creditors. Perhaps understandably to a degree.
It is yet to be seen whether a welcome shift of focus will set in from May 17 that does not compromise main balances.
Balances that should never have swung so deeply into the red in the first place!