29022012 Image Banner 160 x 600

O mnie
Ekonomista, doradca finansowy

Najnowsze komentarze
2014-06-14 21:28
poliwęglan do wpisu:
Niskie płace to żałosny atut
o ile Niemcy mogą przebijać nas pracowitością, wydajnością, to czym przebijają nas grecy?, a[...]
2014-05-20 08:05
proboszcz1 do wpisu:
Niskie płace to żałosny atut
Panie Petru, mówi pan o wydajności pracy. Czy niemiecki kierowca zawodowy przejeżdża 4x więcej[...]
2014-02-16 05:56
artysta do wpisu:
Czas na ekspansję
Zawsze jest czas na jakiegoś rodzaju inwestycje.

 Oceń wpis


While we can say that the US have left the worst behind them,  the euro zone has to face the unpleasant truth.  The zone is in a recession;  with economic indicators trending downwards, but to sweeten this bitter pill, we should mention that this is a light recession, bordering on stagnation.


In the light of the disastrous forecasts of the last six months, this is indeed quite an optimistic picture.  No one today fears a disorderly collapse of the euro zone because of Greek bankruptcy.  Greece has pulled off a coordinated restructuring of its debt which means that it will not repay part of its debt and this has been accepted by investors.  It was possible to do this in a completely controlled way and avoiding any market panic.  This is a very important lesson which shows how it is possible to declare insolvency if you are a member of the euro zone.  If there is such a need and most likely there is,  Portuguese debt will probably be restructured in the same way as the Greek.  Things will go more smoothly this time, although the biggest problem facing Europe - lack of growth prospects - will not go away.


The average size of public debt for euro zone countries is today 88 percent of GDP.  Even Germany who are held up as having an exemplary budgetary policy cannot boast about their public debt which stands at 82 percent of GDP.  To pay off the debt, economic growth is the most important remedy.  This today is the biggest challenge facing Europe.  Germany is held up as the shining example of  increased productivity and export expansion to new markets.  which  has been possible thanks to four factors:   wages kept in check, deregulated labour regulations, in addition to transferring a significant part of production to Poland and also thanks to the euro which for Germany is a cheap currency.  While in 2002 the German surplus on current account amounted to 2 percent GDP in 2011 it is already at 5.7 percent.  The Germans in this way made excellent use of the possibilities offered them by the expansion of the European Union and the creation of a common currency area.  The situation looks completely different in the countries of southern Europe.  Those countries are in recession.  Growth in Italy is forecast at -2 percent and the figure for Spain is even lower - at -3 percent.  Italy is in recession because the economy is not competitive and because of the austerity measures which in the short term choke growth.  Without growth there is no chance of reigning in the excessive debt of those states.  This means no chance of a significant improvement this year and probably not in 2013 either. This means that for the coming year we will remain in a state of uncertainty regarding growth prospects in the euro zone.  In comparison, the US are in much better shape.


While we are not facing a similar catastrophe like the collapse of the Lehman Brothers,  having to function in a permanent state of uncertainty makes people work feverishly to come up with ways of solving the problems faster than by the application of time consuming and unpopular reforms.  One such simple recipe is the division of the euro zone into countries intending to leave (thanks to which they will quickly recover their competitiveness, and those countries which will retain the common currency.  I do not however think that anyone in Europe is willing to apply that remedy for in economics, unlike in physics, it is not possible to experiment.  If the euro zone were split up, there would be a breakdown in trade and production.  It is not possible to predict the long term consequences.  The lesson of the  Lehman Brothers' collapse is that politicians have been cured for all time of taking that sort of decision.  Of course the disorderly variation cannot be ruled out, but today, after the successful restructuring of the Greek debt, the risk of such a scenario is very small.  This of course does not mean that in the future no country will ever leave the euro zone.  It is essential to create a mechanism which will allow countries to slip out of the zone without creating shockwaves.   It cannot be ruled out that a country will want to leave in the future and the creators of the euro zone never envisaged that.  However it would be irresponsible to even entertain the idea in this current period of heightened tension and at a moment when markets are exerting pressure on other countries to go down that very path.


2012-04-20 07:26
English notes Komentarze (0)