It is easy to criticize the governments of Greece, Spain, Italy, Ireland and all of the other countries facing financial difficulties. From one perspective, they have had an extraordinary run. They have passed overly generous programs which have increased their debts well above sustainable levels. The other citizens of the European Union may feel resentment in that they have been having to foot the bill for these excesses.
Even though this may all be true, the Greeks and other financially strapped countries are being offered no palatable choices. With their economies already in trouble, you can understand the populace wondering how they can possibly survive. From their perspective, it is a little like the government showing up at the soup kitchens and telling the indigents that due to budget difficulties they are going to shut them down.
Looking back at the European Union, these difficulties should not be a surprise. The European Union has never really been an economic union. The politics of nationalism prevented that from being considered. Instead, the European Union could probably have been called Bretton Woods 2.0. Bretton Woods was a currency exchange system used by countries to determine exchange rates from 1958 into the 1970s. Bretton Woods fell apart in the 1970s when it became apparent that aritficially setting exchange rates between currencies was unsustainable.
By adopting a common currency without a centralized government with the authority to enforce the financial and economics policies, they had in effect simply set up another currency pegging system. When the EEC was in a boom cycle, the problems could be overlooked. When things began to turn bad however, the individual economies had no alternatives to deal with their problems. If they had their own currency, they could have allowed it to revalue itself against the other currencies. This would not eliminate their economic problems however, it would allow the effects to be softened.
On the other hand, if they had a true economic union with a strong central government, with a common tax policy and common policies on things like unemployment assistance, much of the EEC residents concerns about the fairness of the system would be minimized. In the current system, it is easy to see how the citizens of the countries in trouble might feel like they are simply being discarded in the trash.
Europe seems to understand this now and it appears that it will either move toward a more centralized continental wide government to manage the EEC or the Euro will fall apart as the individual countries abandon it.
From the United States perspective, the survival of the European Union is probably less of a concern than the survival of the European Financial system. The recent volatility on Wall Street, I think is much about whether the European Banks can survive the fall of the Euro. Given the world wide recession that occurred in 2008 when the US Banking system faltered, it is certainly understandable that the US and the rest of the world would have concerns of a similar international financial upheaval.
Unfortunately, there are no easy choices for Europe. We can only hope things go well for them.
With that said, I hope things are going well for you too. Have a great day.
BTW - If you need help with real estate, give me a call. I would love to help. I specialize in Commercial Real Estate and work with Buyers, Sellers, Landlords, Tenants and Investors. I handle Office, Industrial, Land, Investment and Retail properties. Heck, I can even hook you up if you need help with residential real estate.
ALSO - I am sure that my managing broker would appreciate me clarifying that the views expressed here are my own and do not necessarily reflect the views of Commonwealth Commercial Real Estate, its brokers, agents, or employees (other than me, or course.) If you would like to comment on these views, you are welcome to add comments. What you are not welcome to do, however, is to make comments which are inappropriate or objectionable. Should any such comments appear, I will exercicse my right to delete them.
Thanks, all.
David
David W. McCoy
Associate Broker
Commonwealth Commercial Real Estate
10444 Bluegrass Pkwy
Louisville, KY 40299
No comments:
Post a Comment