The euro is safe

The opposite of good is well intentioned. You must evaluate the current outcome of the negotiations of Finance in Europe. It has several weaknesses. First, the recovery mechanism is extended without including the creditors in the process. Originally it was expired in mid-2013, and thus the community held liable only temporary. Now it is permanently installed. The amount is still completely unknown. However, what is clear is that the participation of creditors will not be effective. The basic mistake is that creditors, whether private or public, not necessarily take into liability.

Only in the second stage from 2013, the creditor may be used more than a change in the bond condition. Until this is done in any significant way and it will probably take 5 to 6 years. Therefore, the earliest in 2018, the new bailout mechanism can do its work. This is certainly too late. Second, the Stability and Growth Pact is not receiving the necessary teeth. He remains a toothless tiger.

Although for violations of the convergence criteria, an automatic deficit procedure is followed. The Council can stop this process by a qualified majority again. Since the introduction of the euro, the debt criterion of 3 percent was breached 73 times and it is without consequences. If the introduction of sanctions against deficit sinners will not be separated from the political expediency of the European “horse-trading”, in this way nothing is changes. Maybe some of you remember what happened in the 90s.

At that time, it was said: “The pension is safe,” and no one believed it. Today we say, “The euro is safe.” This statement will not be credible. Nevertheless, may be the problem lies not in the failure to comply with the Stability Pact, but has made the high export surpluses to Germany to the rest of the euro countries. How the other countries are pay these debts? By saving not sure because, they can only export more to Germany.

This would require Germany to import more than they export. It will not happen. If this imbalance is not abolished, this could lead to a collapse of the euro.

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