It
seems that European Union’s list of trouble just got a little longer…
First
it was the socialist leader of France, Francois Hollande’s who won the Presidential
elections by slamming EU’s austerity fix for the debt crisis. The
freshly-elected president said his victory marked “a new departure for Europe
and hope for the world” because it showed “austerity can no longer be the only
option.”
As
France’s unemployment hits its highest level since the inception of the 5th
republic, Hollande has called to rewrite a recently inked and long-negotiated
EU fiscal pact to enforce budgetary discipline. This is causing jitters on both
the global financial markets and on EU chancellor, I mean…German Chancellor, Angela
Merkel.
And
then it was the usual suspect, Greece in the troubled waters…again
Only
weeks out of the woods (thanks to the troika of IMF, EU & ECB) after
forcing creditors to take a massive hit on their bond holdings, the political
turmoil in Athens threatens to sink its latest bailout and drive the insolvent
country closer to a messy debt default and possibly an exit from the euro zone.
As talks to form the next Greek government fails, there are doubts that Athens might
not follow up on its promised austerity measures worth E 14.5B next month. An
analyst on Bloomberg came up with a suggestion to fix the Greek crisis. She
said Germany should provide each of its citizens with a Greece club-med
vacation voucher, so that they can go to Greece and spend quality time & money
to boost up the Greek economy. On the other hand, EMU should provide Greek citizen’s
voucher to visit Germany to witness how Germans pay their taxes!!
The
Pain in Spain is growing day by day. On Monday, it was official, Spain was in
recession and to add salt to the wound, S&P downgraded all of Spain’s
largest banks. The austerity measures that the government plan to take is not
going to help the 25% unemployed Spaniards. Prime Minister Mariano Rajoy has
said that come Friday, his government will come out with a reform package that
will solve lot of Spain’s economic woes. Amen to that, because if markets are concerned
about Greece (2011 GDP $300B), Spain’s economy ($1.4T) is 5 times larger!
And
if Spain fails then Mario Monti’s Italy is going to be the next Domino to fall…
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