Opinion – EUR315 Billion – Investment Plan – European Commission

European flag outside the Commission

European flag outside the Commission (Photo credit: Wikipedia)

This is the latest update from the European Commission on the EUR315 Billion investment plan. It’s worth a read. Check it out!

via EUR315 Billion – Investment Plan – European Commission.

Much of my professional life was involved with preparing or reviewing investment plans.

Whilst I commend the initiative which is desperately needed because financial markets and banks seem to be risk averse or looking for easy money from consumers, rather than helping small businesses grow.

The good news is that EUR315 Billion has been earmarked for investment.

However, reading the various links, I’m left with the cynical view that the European Commission wanted to publish an update whilst most people are on holiday or focused on other things.

Sadly, this initiative is a very long way from delivery of investment funds to the businesses that are most desperate for funding. Since the financial crash of 2008, Europe’s investment for small and medium businesses (SMEs) has been seriously problematic. Remember it’s SMEs that typically create jobs, so this matter is acute. Countries like Spain and Greece have youth unemployment at >50%.

Here are some questions that readily come to mind?

  1. What are the assumptions?
  2. How will funds be allocated most effectively?
  3. What about guarantees, like in the UK for housing loans and small businesses?
  4. Is there an underlying industry strategy?
  5. Will economic best-practice prevail, or will political considerations sway allocation?
  6. What about governance?
  7. What about the best practices to be deployed?
  8. How will investments be monitored?
  9. How will the allocation process ensure maximum investment and minimum leakage to advisors like banks, lawyers and consultants?
  10. How will the allocation strategy be matched to the strategy to create sustainable jobs?

Thoughts?

Opinion – Greece disqualified from new IMF bailout, board told – FT.com – John Gelmini

Whether the IMF is Germany’s poodle or not is an issue as Dr Alf says.

Christine Lagarde’s continued role, as IMF managing director, is another connected issue but people in those sorts of roles do not, as a rule, go quickly if they go at all, so we are left with the continued problem of Greece which was supposedly settled week’s ago.

If the bailout is withdrawn, having been forced onto Greece, then Germany loses credibility and Greece financially implodes, then reverts to the Drachma.

If the bailout is granted, or granted in modified form, it does not reflect well on Germany nor the EU.

We are left with a situation in which what has been agreed needs to be implemented in a form of “Last chance saloon” economics.

Once implemented, there can be no turning back, no vacillation and no backsliding by Greece, Germans or anyone else–This has to be the cocaine addict going into rehab and coming out clean and completely changed but with the doctors and psychologists all singing from the same hymn-sheet.

 

John Gelmini

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