Thursday, December 2, 2010

EU citizens becoming slaves of endless refinancing

At the end of November the Irish government finally accepted the significant emergency bail-out granted by the EU and the IMF. The situation is quite similar to Greece’s in May. While there was actually some helpful action immediately felt by investors, this time things are more complicated. The panic gets hold of other countries in line and spreading as a result of the domino effect over Spain, Portugal and even Italy.

The Europe’s bail-out potential is obviously not big enough to sustain every EU country’s financial problems. That’s what I assumed in the first place. Well, it used to be a good idea, as long as Greece was perceived as a singular case of desperation, as an exception. The risk of contagion was yet invisible in May. Now the biggest European economies are threatened by disaster.

Until recently, Europe’s rescue plan was intended to offer cash to help economies get over some temporary difficulties. But as more countries face the same problem, we understand that multinational banks intervention will only cause currencies failure and a transfer of wealth towards the creditor pyramid. Soon enough the multinational banks will be able to control the finances of the countries they "saved".

In a desperate attempt to save local banks, uninspired governments decided to swallow the banks bad loans and to endanger their own creditworthiness. Big mistake. It’s like swallowing something you cannot actually digest, because you don’t have a stomach for that.

Ireland and Greece are clearly not able to face an austerity budget right now and can hardly raise enough taxes to finance the huge borrowing. Portugal is also on the edge of soliciting a bail-out while Spain is looked upon as another potential victim, although its situation is less troubled.

Now, common citizens from all the EU countries are forced to accept the fact that all their life savings are used to bail out neighboring bankrupt economies. Yes, that’s the spirit of helping a neighbor in need… but can we afford doing this again and again, every 3 months? Or isn’t this just a big secret machinery put in place to create dependencies and a new kind of slavery?

I’ve been asking myself the same question for quite a while: what will happen to our dearest Euro? It seems like the brilliant minds who created the Euro phenomenon were not 100% committed. They established a monetary union without establishing a fiscal union. And now it’s kind of late to slow down, go back a few years and set fixed exchange rates to prevent speculation against national European currencies.

I hate to acknowledge that we all depend on Germany and the European Central Bank to sustain a future that no longer exists. They provide us with sources of money but they also turn us into slaves paying back debts which are not necessarily ours. The spirit of union, is it worth?


Cezar said...

i wonder what will happen when the debt pyramid falls down...

Stela Gheorghe said...

Do you reckon that is likely to happen? I wouldn't mind knowing your opinion, Cezar :)

Cezar said...

i'm sure that will happen :) it's the way things work these days. I'm not sure what the consequences will be, though.

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