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August 9, 2011

Lawrence Efana

There have been too many prognoses to the extent that confusion has become a part of the real problem. Present challenges in the economic and monetary systems are unique and interesting also in two ways: a) short-term and b) long-term policies and actions. Political values in both sides of the Atlantic spare not enough time and energy to truly evaluate what is to be rightly taken as the appropriate steps for each. Of-course, unpredictability of variables in the crisis also makes both short and long-term policies and actions hard to decide on with enough political consensus. Political outcomes are held hostage by the markets, for fears about risks and flaws on the issue of debt burden and repayment possibilities with global economy what it is: when people felt they were coming out of the recession to again clearly see before them chances of second-dip. One could see European Financial Stability plan and latest European Central Bank plans to buy Spanish and Italian bonds a few of the immediate short-term measures, though with long-term consequences, depending on how situations turn out to be with the markets, consumption and growth possibilities.

We have created a 'merry-go-round' economic system: both lightly and heavily capitalistic in our world. What can we do therefore without sacrifices, and bailing out when crises are intense, in the hope that with breathing space those nations now heavily in debt, will have to tidy-up their economic systems, practices and values. And yet this has to function within the Union frame or else it sounds self-defeating, challenging why it was formed at all if precautions of extraordinary type: breaking the EURO-zone in two parts], would have to be given a thought later. Germany and France, despite the fact that they also defaulted sometime back, waken-up and are egalitarian in playing their role as the Union pillars. Sharing responsibility for defaulters of a more problematic order: Greece, Ireland and Portugal, is not however going to be an easy equation to solve for EU/Euro-zone member states due partly to the chances of them mustering political consensus at member-state parliamentary level. More-so, at a time that they also feel economic and financial pressure - less though! A union that abandons its parts in times of crisis, would show an example not worth to learn from by systems, families and people. It is not a simple case of divorce even in the type of capitalist system built-up over the years. Europe is the seat of solidarity so the question would be: can they afford to back out now or dismantle their machinery?

Alternatively, parallel to efforts to dress our capitalist systems and impress, owing to how many connect it with political democracy, the debates coming our of dilemmas in the US: other side of the Atlantic], is becoming quite dramatic. It is unusual to find people there call for a revolutionary change of their system. The message is, we have seen enough and are fed-off! Is the debt crisis in the EU and its capitalist economy also going to make people opt for a similar debate and agitation for that option? It is no twisting of the 'change' calls of 2008, despite blames. For what therefore are said to be wrong with our capital systems locally and globally see the site: systemhttp://www.youtube.com/watch?v=4Z9WVZddH9w].
If this website can help politics, understanding, policies and solutions, then fine enough!

August 10, 2011

Kazimierz Wiesak, Pennsylvania State University, Silver Contributor (73)

1. For every $1 borrowed there is exactly $1 lended.

2. The total wealth that wealthy people can have is equal to the total value of all productive capacity (factories, machines, office biuldings, etc., etc.) plus the value of debt they can lend to ordinary people. That is the greatest possible wealth that wealthy people, taken as a class, can have.

3. Unfortunately, they want to have more, so they started lending to noneligible (excessively risky) borrowers. Unavoidably, many of those borrowers have defaulted.

4. In the last few years, the ruling classes in USA have decided to make the U.S. government the borrower of last resort.

A solution is simple, wealthy people should have less money to lend and poor and middle class should have more money to spend. Achieving that is childishly simple: raise taxes on wealthy and lower taxes for middle class and poor. Easier said than done. All media are owned by wealthy people and they won't even allow such ideas to be circulated in newspapers or on TV. And no media outlet will allow to say that middle class in USA pays almost 50 percent in total taxes (including medical insurance) and wealthy pay about 30 percent in total taxes. Interchange those two numbers and "financial crisis" is solved.

They even misname the concept, we have debt crisis, and not some mysterious "financial crisis" we hear on TV.

August 10, 2011

Michael Schutte

No doubt the Euro zone´s debt level is too high, being at 85% of GDPat the end of this year. However signifcant strides are being made to reduce additional debt level. The Euro zone will add 4,6% of GDP in new debt in2011. Too high of course but comfortably low when compared to debt levels in Japan (200%+ of GDP), U.S. 85% and adding a whopping 10% each in 2011 and 2012 and U.K. 80%+ adding 10% each of the next years. We may not be satisfied with the progress made but the Euro zone is reforming itself escpecially when compared to the U.S. or Japan. But to me it seems as if international financial players are trying to demolish the Euro zone so that the U.S. Dollar will continue to be the only world reserve currency. It is high time for this forum to take up this issue.

August 10, 2011

Lawrence Efana

You need a frame always in discussions like this. We have seen such elsewhere so this is or should not be an exception. There will always be specific or general frames of debates engaging us. For latter the video: systemhttp://www.youtube.com/watch?v=4Z9WVZddH9w), I repeat is obviously helpful. In it, the very relatively 'technical' and 'specialized' or more of the 'professional', in this case, "the economic and financial", carry with them details and in fact, are comparative - from where we style what to learn, take out, think about and put or not put into practice our way. America and Europe are not much different for this frame of argument.

We have all seen and read several interpretations of what now happens across both sides of the Atlantic and indeed beyond. We are seeing in both or all, how economic professionalism and technicalities, which could work in harmony in politics turn now more to create a greater chaos, instabilities and panic, all of which continue to eat-up trusts and the spirit of proactive action-frames of relative unity of understanding, estimates of risks and of a functional consensus.

Maybe, many are not seeing the "poisoning" ongoing ideologically in politics. Kazimierz Wiesak of Pennsylvania State University, you pick-up an element of a scientific argument well documented in cited video, but frame your argument in a very incomplete manner: "A solution is simple, wealthy people should have less money to lend and poor and middle class should have more money to spend. Achieving that is childishly simple: raise taxes on wealthy and lower taxes for middle class and poor." Many just don't feel good when some cast in views likely to leave others "more uninformed". Not a way to help the problem we are in, be it in the EU or US. Political debates are themselves poisonous and adding sensitive technicalities of the economic and financial realities of present-day experience to it, could at times mean "throwing petrol into fire."

Each and everyone of us could do well to be accountable. Debt history and concept of debt burden are, to many relatively dependent variables. Perhaps if we remove the poisons in our politics we might help make the situation relatively independent. The poison in our politics will only lead to destruction and more chaos. Yet they are what we least want or wish! How we put the statistics we see and make an understanding sense of them in our world can obviously be frightening. That is what Michael Schutte, by right has done. Note from him: "But to me it seems as if international financial players are trying to demolish the Euro zone so that the U.S. Dollar will continue to be the only world reserve currency. It is high time for this forum to take up this issue." The statement is politically a curious one for an EU whose membership structure is different from its specific Euro-zone membership structure, in spite of the monetary policy and legal frame of its unity/bonds. This internal gap is not making it easy for the Union, vis-a-vis the challenges from US or the dollar, and or the rising strength of the Chinese Currency. It is a time to set the political and economic and financial houses right everywhere, which might reduce panic and passing bugs.

The capitalist system run by our countries in relatively different degrees are also there to provide examples - nationally and transnationally. The pride of democracy is a part and parcel of the success now gradually eluding as we fail to see the "challenges of time" in the global world nobody developed for us, but ourselves. When we fail to "give a little and take a little" - adopting that as an arm of the solutions to the challenges of our time], then we are poorly equipped with understanding of the scope of our problems and challenges. That is not to say living in debt or allowing a nation be consumed by debt is an option any sane group or leadership would willingly let happen. It is no good living outside one's own resources or means, and yet while we proudly say so for us humans, we forget how we jointly have tormented and recklessly exploited our nature and environment: live out of what they allow us, that would make it easier for them to keep hosting us. Now as it is, that ease is not much there anymore! We are frightened, but managing the consequence thus is not going to salvage any nation or group independently. We need each other to cope!

Coordinating the experiences we have is a good ground for our learning and chance to understand better how to manage our problems as they come in the "changing faces" we see them come. Years ago, it was booming in Ireland. She became the top talk and model in Europe. Greece, they say took to the squandering path and Portugal a victim of obsolete infrastructures, etc. How do we coin lessons from these and others - many of which wars have led to where they find themselves today? We simply have reached a stage of the odd debates we partake, not to stop to see the interconnections in the things constituting the various types and degrees of problems we are now facing -- a culmination of the failures, especially of politics and not excluding aspects of wastefulness with our technologies.

August 12, 2011

Greg Randolph Lawson, Wikistrat, Platinum Contributor (507)

Europe is in a very tough spot. Long-term, there are really only two solutions, a break up of the European Union into smaller components that fit together more seamlessly or a much greater political union.

The problem is, the political union is likely to be under largely German auspices given their economic clout. This will make it difficult for even a de facto, much less a de jure, political union to come into full existence. That said, it is the most likely scenario. A divorce at this point in the EU project's history would be too deeply a wounding experience for it to be the most probable outcome.

It will take time though. In the interim, pain will be all around and Europe will slide back from a global leadership role. Expect Euro bonds to happen and expect haircuts to happen too, its a question of when more so than if.

Unfortunately, absent major changes, the same may happen in the U.S. While tackling domestic entitlement spending is glaring necessity, the political will has yet to be expressed outside of the Tea Party (which has distinct limitations). While I hope this does not happen, a retrenchment from the global scene seems like something the U.S. is preparing to do by default while attempting to avoid a default.

These are stormy times and the immediate future is likely to be gloomy. The whole concept of the "Western World" is coming under unprecedented pressure and the world that will emerge at the end of the tunnel will be vastly different and vastly more tilted in Asia's favor.

Unfortunately, even there, we see looming problems as geopolitical tensions heighten. Wars seem far off today. Ten years from now, they may not as the game will be fundamentally different.

August 17, 2011

Anna Meier, Knox College, Galesburg, Illinois, Bronze Contributor (12)

Germany is not entirely to blame for mismanagement of the crisis. The European Union is a UNION, after all, and thus all member states share a responsibility to act when a crisis ensues. However, the EU has been plagued by a problem similar to what NATO faces: too few member states have the resources to help out other member states, meaning that one or two states (in the case of NATO, the U.S.; in the case of the EU, Germany and France) have little choice but to take the lead. In one sense, Germany does deserve some blame for not facing the realities of the situation sooner, but you can't blame it for being unwilling. The problem is structural and runs much deeper than cautionary action on Germany's part.