Articles/Columns
The European Crisis is Far From Over
A change from within – European citizens in recent elections have voiced opposition to the status quo of continued austerity measures to resolve the ongoing European debt crisis. Recent reports in Reuters, Bloomberg, and the New York Times illustrate the impasse taking place in Europe. The French just elected a Socialist President (Francois Hollande) to replace Sarkozy (the incumbent Conservative), and the Greeks just voted out the ruling majority from its Parliament. As Bloomberg reported, the Greek vote clearly illustrated that Greeks are not willing to accept further cuts – almost 70 percent of the voters supported political parties opposed to the ongoing austerity measures. Other localized elections in Europe also shifted the political landscape away from the incumbency. As for France, the new President-elect will have to reduce government spending, which currently spends 54 percent of their GDP, as reported by Reuters. For some European nations, poorly managed public spending has forced them to make cuts in public spending as criteria to receive financing support directly or indirectly from Germany and other northern European nations. These austerity measures are limiting economic growth in these countries, which prevent them from repaying the extended credit lines. As the New York Times clearly stated, the situation in Europe represents a conundrum for investors who recognize that the austerity measures aimed at countries like Italy, Spain, and Greece have consequently caused their economies to shrink. Furthermore, the recent votes highlight the impending challenge to balance the conflicting demands between voters and investors. For the remainder of 2012, the sail is aiming toward a voter-directed Greek exit from the Euro; at which time the European Stability Mechanism will inject billions of Euros to firewall and secure the other vulnerable European States and save the Euro as a unified currency (and prevent a global catastrophe). As Bloomberg points out, the European Union and international creditors may halt the bailout funds to Greece, leaving Greece to default and exit the Euro – economists at Citigroup Inc. say the chances of a Greek departure in the next 18 months are now as high as 75 percent. This whole ordeal has become a matter of when rather than if. Then, the real task will be to contain the fear within Europe and stabilize the financial systems. Otherwise, the mood will shift for years to come.
<For an interactive chart illustrating the net-debt flows, click on the link below>
http://www.nytimes.com/interactive/2011/10/23/sunday-review/an-overview-of-the-euro-crisis.html
Source: New York Times, Oct 2011
（2012/5/10 掲載）