Subregions of Europe (UN geoscheme) (Photo credit: Wikipedia)
This is an outstanding, must-read, article by economic think-tank Bruegel. Check it out!
via Eurozone South is still not a place for young workers | Silvia Merler at Bruegel.org.
The article shows clearly and graphically the catastrophic levels of youth unemployment in Southern Europe.
Let’s be clear, this is because of the constraints of the Euro. Southern Europe is left broke, indebted and with wage levels that are too high to compete internationally. Because of absence of investment, the economies of Southern Europe remain doomed. Germany meanwhile expects Southern Europe to reform labor markets, like Germany did after the fall of the Berlin Wall. The troika of the IMF, the ECB and the European Commission have stuck rigidly to the medicine of austerity, and indeed for a prolonged dosage – they were largely acting as Germany’s proxy.
Meanwhile, Europe goes from crisis to crisis. Well-known macro-economist, Gavyn Davies, in his FT blog, cites the three critical dates in January:
- Preliminary opinion of the Advocate General of the European Court of Justice (ECJ) on the legality of central bank bond purchases, due on January 14
- Decision of the European Central Bank’s governing council on the size and type of “sovereign” quantitative easing (QE), due on January 22, and
- Greek election on January 25.
There is now major popular push-back against austerity and immigration, with the rising importance of anti-European politics and the increasing polarization of politics towards both the hard-right and the hard-left. Matters are being aggravated by by the rise in terrorism in Europe,
I have been encouraged by the new team at the European Commission but I fear that their armoury is ‘too little’ and ‘too late’. Similarly, the leadership at the ECB have been held back by Germany from full-scale QE. I respect modern Germany and her democratic institutions but I fear Germany must change or she will inflict severe harm to Germany, as well as the rest of Europe.
By the end of January, there will either be an economic disaster, another fudge from the European authorities or the keystone of a real recovery. I am an optimist but I’m worried.
As a specialist in delivering strategy, I maintain that it’s time to start again with Europe, with a white-sheet, blue-sky-brainstorming, cast aside constraints of existing treaties, and identify new strategies – only new strategies will lead to paradigm shifts in Europe and an effective recovery for the whole of Europe – North, Central and South.