The Euro zone still deep in the dumps

I couldn't help but notice that after several years of struggling and brainstorming, the fate of the euro still remains uncertain.  The European currency continues to walk around like a very sick patient looking for a miraculous cure. Whereas its various parts are being periodically swathed, nobody considers treating the poor patient as a whole. Unfortunately, the euro zone is still going through a serious sovereign-debt crisis and growth stagnation.

There are actually very few solutions to boost the European economies. Most governments in the euro zone have been recently tossed out by budget deficit and eye-watering costs. The dire economic straits are currently emphasized by visible lack of fiscal unity. There is still a huge gap between old and new members on so many levels. Most European citizens cling to the hope that a certain federalism will eventually emerge to keep things going, but that could take another decade or so.

At this point, the net foreign borrowing in the public, as well as in the private sector, remains problematical. Indebtedness prevents governments from applying the usual fiscal incentives, such as currency devaluation and monetary policy. Structural reforms are out of question, at least not in the near future.

Countries dealing with budget deficit could reduce payroll taxes in order to minimize labor costs. Otherwise, they could take the painful decision to raise VAT and cast down imports. It seems like globalization can really gobble up a big chunk of economic perspectives for the European markets, favoring other ascendants, such as China. On the contrary, countries dealing with consolidated budgets should slow down their rhythm by letting inflation run higher. The problem with such countries, as Germany, is that they refuse to take initiative for an eventual unity and are afraid to risk their own competitivity.  Although Germany often suggests political unity, desired by most European leaders, it dodges the idea of fiscal unity, so necessary in the future, to maintain EU afloat.

Even countries that have already received considerable bail-outs over the past two years find themselves still deep in recession and may need second or third aids. EU leaders are currently evaluating the possibility of raising the amount of rescue funds, as a viable solution to save the Euro zone. Many economists highly doubt that would help. The consequences for each of these beneficiaries can turn out to be disastrous in the long run. 

Europe appears sluggish and unprepared to face another euro crisis and it is almost swamped by the harsh perspective of having to give up on its dearest currency. But what are the alternatives? Almost non-existent. The euro must survive in order to avoid an economic chaos and secure the magnificent euro project. The only option for Europe now is to square off and focus on how to make the economy grow, even in painful circumstances.

The truth about Moldova

- Moldova is a small ex-soviet country situated in the Eastern Europe
- Moldova is the last European country to be governed by the Communist Party (until 2009)
- Moldova has EU prices and third world wages - average salary is 100 euros, 1kg of potatoes -1,5€, a pair of shoes - 80€ and home heating energy bill in winter - 90€/month.
- 50% of the Moldavian population is working abroad to support families left at home
- Moldavians are very nice and friendly people unless you ask them about their history, which is painful
- Half the inhabitants sympathize with Russia and the other half with Romania, creating an atmosphere of mistrust and dissension
- Moldova has no president for over 2 years, due to lack of political agreement between the major parties
- Moldova occupies a surface of 33846 km2 but has more political parties than any other country in the world
- Most Moldavians are nostalgic about the Communist period when their lives were secure and simple
- Corruption is almost legal in Moldova, everybody knows but nobody does anything to stop it
- Moldavians really love their country, but they have never been able to protect it from invaders and submissively yielded every time
- Moldavians are obsessed with food and fancy clothes. They cook way too much on special occasions only to eat half of it, and wear fancy clothes every day only to display their wealth
- Moldova is a country of contrasts. The poorest European country shows off the most expensive houses, cars, clothes, jewelry. But in spite of appearances, most people are actually striving to survive.

EU citizens becoming slaves of endless refinancing

At the end of November the Irish government finally accepted the significant emergency bail-out granted by the EU and the IMF. The situation is quite similar to Greece’s in May. While there was actually some helpful action immediately felt by investors, this time things are more complicated. The panic gets hold of other countries in line and spreading as a result of the domino effect over Spain, Portugal and even Italy.

The Europe’s bail-out potential is obviously not big enough to sustain every EU country’s financial problems. That’s what I assumed in the first place. Well, it used to be a good idea, as long as Greece was perceived as a singular case of desperation, as an exception. The risk of contagion was yet invisible in May. Now the biggest European economies are threatened by disaster.

Until recently, Europe’s rescue plan was intended to offer cash to help economies get over some temporary difficulties. But as more countries face the same problem, we understand that multinational banks intervention will only cause currencies failure and a transfer of wealth towards the creditor pyramid. Soon enough the multinational banks will be able to control the finances of the countries they "saved".

In a desperate attempt to save local banks, uninspired governments decided to swallow the banks bad loans and to endanger their own creditworthiness. Big mistake. It’s like swallowing something you cannot actually digest, because you don’t have a stomach for that.

Ireland and Greece are clearly not able to face an austerity budget right now and can hardly raise enough taxes to finance the huge borrowing. Portugal is also on the edge of soliciting a bail-out while Spain is looked upon as another potential victim, although its situation is less troubled.

Now, common citizens from all the EU countries are forced to accept the fact that all their life savings are used to bail out neighboring bankrupt economies. Yes, that’s the spirit of helping a neighbor in need… but can we afford doing this again and again, every 3 months? Or isn’t this just a big secret machinery put in place to create dependencies and a new kind of slavery?

I’ve been asking myself the same question for quite a while: what will happen to our dearest Euro? It seems like the brilliant minds who created the Euro phenomenon were not 100% committed. They established a monetary union without establishing a fiscal union. And now it’s kind of late to slow down, go back a few years and set fixed exchange rates to prevent speculation against national European currencies.

I hate to acknowledge that we all depend on Germany and the European Central Bank to sustain a future that no longer exists. They provide us with sources of money but they also turn us into slaves paying back debts which are not necessarily ours. The spirit of union, is it worth?

Blagues tristes sur la situation actuelle de la Belgique

1)  Une salle de spectacles à Bruxelles où sont réunis un grand nombre d’artistes du pays. Dans un micro, une voix dit aux Flamands de s’installer à droite, aux Wallons à gauche. Des voix s’élèvent alors : «Et nous les Belges, on se met où ?»

2) L’immeuble de la célèbre radio télévision belge, Bruxelles, qui abrite les journalistes francophones et flamands. Lesquels sont virtuellement séparés par un mur. Sur la porte de la partie francophone du bâtiment, on peut lire : «Ici, on parle le français.» Sur l’autre porte, celle des Flamands, il est écrit : «Ici, on ne parle pas, on travaille.»

Recent government measures reveal the degradation formula

During the slump the government is expected to spend less and target better. But does it have the necessary skills and intelligence to do that? Our political system has recently shown nothing but inefficiency, focusing only on cuts. A great deal of the burden lies on the middle class - the segment of our economy that has to support most of the costs running this nation. The wealthy elite advantages are left untouched; their millions are untaxed.
Cutting spending as well as raising taxes will definitely affect the economic growth in the long-term. There is no dream of prosperity for Romania at this moment; it’s science fiction.

I am not sure the recently taken measures are a safe method to pump up the economy, because having less money to spend, people become less confident and more insecure about their lives. (They acknowledge that the system is obviously going wrong but can do nothing.) Cutting spending is likely to cause more unemployment, especially in small companies. They will be no longer able to produce, expand or hire; always overwhelmed by the fear or even higher cuts and tax increases.

So, the challenge of our government is to find an intelligent way to combine reducing deficit with stimulating growth, smoothly and consistently. Unfortunately, most of our elected officials are only anxious about their own self-interests and don't care a bit about the future of the country. Their attitude is not only startling but also alarming, at a time when the nation requires competent leadership to pull us out of the recession.
They seem to have noticed that our economy tumbles down into a terrible abyss but the only solution they found is cutting wages and pensions to avoid hiking the flat tax and VAT (which is unavoidable, it’s only the next step, since the first solution will certainly not show any visible results).

Politicians have no idea how demoralizing and risky these measures are. The number of homeless people will increase, as well as suicides.

Here’s the formula I compiled to show which the future of our nation is in the years to come:

Cutting Wages -> Lower Consumption -> Layoffs -> Unemployment & Small Firms’ Bankruptcy -> Homelessness & Suicides -> Degradation of the Nation

Casa arde dar baba se piaptana, pana in 2012

Francezii sunt obsedati de viitorul lor politic. In loc sa se concentreze pe guvernarea actuala si sa rezolve problemele primordiale ale tarii, ei nu fac decat sa discute despre prezidentialele din 2012 iar ziarele sa emita ipoteze privind posibilii candidati.
Dreapta, in speta partidul lui Sarkozy, aflat la guvernare, ar fi bine sa se agite mai mult ca sa-si imbunatateasca imaginea, cam sifonata dupa esecul la alegerile locale din martie, avand in vedere si popularitatea lui Sarkozy, mereu in descrestere, iar stanga, in frunte cu PS, ar fi bine sa lase deoparte vulgaritatea, stilul taios de a ataca pe oricine si lisa de diplomatie.
Iata ca se aplica foarte bine zicala "casa arde dar baba se piaptana". Europa e in plina criza, tara e coplesita de somaj (180.000 offres d'emploi pour 500.000 CV. Vous avez quoi comme solution?) dar politicienii nu fac decat sa viseze la niste alegeri care sunt departe de momentul prezent. Eu nu inteleg aceasta fervoare si nevoia se a se agata de ceva intangibil.

Cu scuzele de rigoare, prefer sa urmaresc si sa comentez din cand in cand situatia politica din Franta decat cea din Romania - care ma umple de dezgust si ma lasa mereu fara cuvinte. (Nici grevele si nici starea generala de nemultumire a oamenilor nu vor schimba nimic. Suntem condamnati la tacere, cel putin pana isi termina Basescu mandatul. Intre timp, ar fi bine sa invatam din greseli si sa nu le mai repetam.)

China, o noua forta militara de temut, dar oare ce urmareste?

China s-a lansat recent intr-o ofensiva mediatica avand ca scop dezmintirea zvonurilor potrivit carora ar trebui sa existe temeri legate de cresterea considerabila a puterii sale de innarmare in ultima perioada.
Tarile occidentale acuza de ceva timp lipsa de transparenta a Chinei vis-a-vis de politica sa militara. Se pare ca in 2010 peste 532 de miliarde de yuani din bugetul national au fost alocati pentru aparare si cheltuieli militare. 

Faptul ca Pekinul refuza sa difuzeze date exacte despre cheltuielile sale militare genereaza in mod evident niste intrebari legate de ambitiile si obiectivele sale de viitor. Doreste oare China doar sa se protejeze sau planuieste sa cucereasca noi teritorii? 

Pe masura ce China acapareaza in ultimii ani prima pozitie in economia mondiala (in mod surprinzator si neasteptat pentru multi), am observat ca s-a rasturnat balanta de forte economice, oarecum fixata dupa cel de al doilea razboi mondial. Iar acest dezechilibru si aceste aparente ambitii nu pot decat sa anunte schimbari, la care urmeaza sa fim martori, doar ca nu stim inca exact despre ce este vorba. (Vreau sa evit sa fac paralela cu Germania anilor 30 secolul trecut... dar imi vine in cap fara sa vreau; oricum nu sunt aceleasi premise si nici porniri, dar mai stii?..:))

Daca urmareste doar sa-si apere interesele economice, e inutil. Conform estimarilor in 2040 China va deveni cea mai bogata tara din lume iar cota ei din PIB al lumii va ajunge la 40% (sa nu credem orbeste in aceste date, sunt orientative). Se pare ca in ultima perioada China investeste din ce in ce mai mult in resurse energetice, cucerirea spatiului si solutii informatice (invatand sarguincios de la altii si educandu-si tinerii in Occident!).

Pentru a mentine linistea in jurul acestui subiect Pekinul trebuie ori sa dea dovada de diplomatie, evitand sa-si atraga suspiciunea altor tari, ori sa ofere transparenta si sa arate care este situatia reala din acest punct de vedere. Deocamdata doar Ministerul Afacerilor Externe isi bate capul de acest aspect incercand sa nu deterioreze relatiile diplomatice printr-un discurs care se vrea linistitor si responsabil.
Cert este ca anumite tari sunt deja cuprinse de suspiciuni si temeri in ceea ce priveste planurile de dominatie mondiala ale Chinei.

Retirement dreams fallen apart

There are rumors that the Romanian government is going to remove the right to retire before 60, as part of the fiendish plan to reform the pension system and keep public finances afloat.
The decision is obviously taken due to deepening recession and swelling unemployment, but also the tendency to keep the pace with the most successful Western European Union countries that have risen their legal retirement age to 60 or even so, long time ago and are now considering to rise it again.

I don’t really know what to say. I am bewildered at this troubling news, trying to warn off my dreams about a happy retirement.

I have always wished to buy a peaceful small cottage in the countryside and dedicate the rest of my days after retirement to reading, writing and spending time surrounded by nature. Now, I am not even sure I would ever reach that moment. Now I am not motivated enough to live, knowing that I would have to work the most part of my life and perhaps die at the office sometime before the legal retirement age. You have to be bullish not to see what this is all about.

Our government’s purported intention is certainly not to destroy our dreams, but their indefatigable desire to take away from us the only period in our lives when we can actually do what we like leads quite to that cruel resolution.
I agree that our country’s legal retirement age is one of the lowest in Europe, but this avalanche of spending cuts, growing taxes and painful reforms are making us very vulnerable and uncertain about our future. Is there any future at all?

The attempt to restructure a pension system, which is, by the way, neither the greatest nor the most generous in Europe, successfully stokes our patience and hurts our expectations, marking the beginning of another epoch for common people: that of indifference and lack of interest towards work. There is nothing left to persuade us, there is no bright perspective. We are genuinely pessimistic and totally disgusted.

The most stupid argument I ever heard was: “a rise in the retirement age is inevitable as people live longer and save less”. Do we really live longer than our great-grand-parents lived? I remember that my great-grand-father died at 90 and my great-grand-mother at 94, my grand-mother is now 81 and she’s quite in good health. They are probably making a comparison with the middle ages when millions of people used to die under 60 from incurable diseases such as the plague or cholera, or were devastated by frequent and violent wars.

In UK the retirement age is progressively increasing to 68-70 years, in France to 63, in Germany to 67… How sad is that?
Our generation is currently intimidated by the prospect of saving for a pension, which seems to be so faraway.

I don’t believe in predictions of increased life expectancy. Our politicians are callously and self-destructively feeding this idea to make excuses for their lame decisions.
We work all our life and sometimes even neglect our health in the scramble to find tranquility and security after retirement.
That small cottage in the countryside was my balm, my idea of redemption, after a debilitating life dedicated to work.

Negotiating the controversial rise in the legal retirement age, while the economy remains deep in the dumps, is the government’s opportunity for global grandstanding and our opportunity for rethinking our values and hopes.
Bereft of our “small cottages”, give us something in return, something worthy and motivating enough to make us want to still get up every day and go to work…

Apropo de soarta monedei Euro

Apropo de conspiratia impotriva monedei europene despre care vorbeam intr-un post anterior si despre riscul disparitiei ei in urmatoarea perioada, am gasit o parere interesanta si reliable a unui expert in domeniul financiar, exprimata recent in editia din 15 mai 2010 a ziarului Jurnal de Chisinau:

"Nu cred în dispariţia euro de pe piaţa valutară" a spus directorul Agenţiei de rating şi estimare “Estimator-VM” Natan Garstea. “Speculaţiile pe marginea scoaterii din circulaţie a monedei europene sunt mai mult o chestiune politică decât una economică. Moneda europeană va merge bine în continuare."

Opinia sa vine ca un raspuns la afirmatia ingrijoratoare expusa de Jacques Attali, former chief of the European Bank for Reconstruction and Development:

“If there’s no extremely strong and immediate action, next year the euro won’t exist anymore. It’s best to prepare for the worst.”

Pachetul financiar pregatit de catre UE si FMI pentru a salva Grecia in schimbul unor masuri de austeritate foarte severe nu a avut efectul scontat asupra speculatorilor care se pare ca nu urmaresc decat deprecierea monedei euro. Dar stau si ma intreb, daca dupa atata efort de dragul Greciei, alte tari, precum Italia, Spania, Portugalia, chiar si Romania vor urma aceeaasi soarta, care va fi solutia petru ele, fiind deja toate resursele epuizate?

Prea multe sunt diferentele dintre cele 27 tari membre la nivel de economie, masuri sociale, abordare, mentalitate. Din cauza acestor neomogenitati s-a ajuns la situatia de disperare in care ne aflam acum. Poate ca inainte sa ne fi bucurat atat de mult ca intram in UE trebuia sa ne fi gandit daca meritam sa ne aliniem anumitor standarde, daca suntem capabili sa tinem pasul cu niste piete care se bazeaza pe principii liberale de secole. Unde varsta de pensionare este demult 60 ani sau peste. Pentru noi toate aceste schimbari sunt ca niste lovituri sub centura, foarte greu de digerat, suportat, acceptat. Facem sacrificii ca sa ramanem in Europa, sa ramanem pe linia de plutire si sa salvam unitatea, care si asa este fragila.

Some thoughts about EU's financial weakness

All 27 EU members are in danger if money from this amazing €60 billion pot is disbursed and finally not paid back, because all members would have to pay extra into the budget to top it up... This great plan, is it going to work?...

For a while, I thought there is an international conspiracy to destroy the euro... and I am still considering this idea. USA would have reasons to do that and Asian markets too.

The United States of Europe sounds awesome. It's like dreaming about re-uniting Moldova with Romania. Futuristic but not impossible.

Some weak countries depending upon others to save them, isn't this quite the beginning of this dream coming true? Not quite exactly as we expected. Mutual aid, bailouts, support are welcomed and encouraged, but is it quite the right thing to do? An attack on one member is perceived as an attack on all. That's a good thing, though the means are risky for all countries in the long-term.

Though necessary, steep tax increases and deep spending cuts are likely to plunge us into a deeper recession this year, because there is no country in Europe able to counterbalance the high-deficit countries' financial situation by an aggressive economic stimulus of its own; not even Germany.