Everyone has most likely heard enough about the European Union and their problems with the debt loads of Ireland, Spain, Portugal and Greece. There has certainly been enough in the news over the past year. i have posted a comment or two on the issue to try to provide a little more balance on the scope of the issues under discussion as the bulk of material that i come across day-to-day takes a very single-focus view on what is happening.
What happens in Greece is important
It is important because the EU makes up a huge chunk of global economic output and trade. There are only really 4 major blocks at the moment – USA, the European Common Market, China and Asia-ex China. Pretty much everything else is peripheral – and that includes Australia.
We are currently witnessing the tensions and turmoil that comes into play when a system fails to provide security for its population. That is, when the EU fails to properly control its members; when the Greek government becomes so entrenched with cronyism that they fail to protect their population; when the only global superpower – the US – cannot protect its own citizens and interests. A breakup of the EU would create incredible turmoil on currency, debt and sharemarkets and this is what all the political hot air has really been about. If the Greek population votes in a government independent of past crony ties then it could trigger a default on the EU terms for the austerity package, and that would have huge implications for everyone.
I think that our sound bite world can sometimes make us weary of one single topic too quickly, and therefore stop us from paying attention to important matters, so here’s a little bit of interesting reading on what are considered the side issues of the ‘Greek Bailout’ or whatever else you would like to call it.
ps.. sorry about the messy link format – technical glitches… TGIF.
A look at an olive farmer and his changing fortunes. http://www.spiegel.de/international/europe/0,1518,772260,00.html#ref=nlint
A look at well informed global commentary from the Financial Times. http://www.ft.com/cms/s/0/cd8e006a-14b2-11df-9ea1-00144feab49a.html#axzz1RTIOlW4Y
What if Germany were asked to implement equivalent austerity measures? (heaven forbid that we consider what would happen in Australia if 17% of our economy was PLANNED to be removed in the next few years!) http://www.spiegel.de/international/germany/0,1518,771751,00.html
The big issue at stake here is the sovereignty of Greece. It has basically been trashed. Some folks will say that is a good thing, while others will say i am wrong to even suggest such a thing. However, it is hard not to come away with the impression that the only outcome here is that the corrupt within Greece will continue to be corrupt, that the EU trade imbalances will be entrenched even further, and that there is an awful lot of posturing on this issue and very little in the way of genuine attempts to tackle the problem of sovereign debt in a market like the EU.
Here is one commentator’s version of how that all pans out. http://www.prosper.org.au/2011/06/07/how-financial-oligarchy-supplants-sovereignty/
Have a great weekend!