Today is the defining day in Eurozone as they say....Greeks who now are openly protesting against the austerity measures are going to elections to elect a government which matches their aspirations.
We have all been hearing of a word Austerity ...which would mean fiscal discipline through controls on excessive spends but also puts a question mark on the life of common people. Their earnings, jobs, pensions get slashed, their way of life is hit, fine, but does this all bring about the improvement in the basic state of the economy. The answer is NO !
The nations got access to cheap funding on joining Eurozone...now its payback time..and they like the typical Cricket in "Cricket & the ant " story haven't prepared themselves for the winters....they were just too busy partying !
Now the ant doesn't want to share its reserves with the cricket...unless the cricket agrees to severe austerity measures. It had been warning the cricket all along that harsh winters are approaching.
Naturally the cricket is upset. It still wants the dole but without austerity.
In my view, what would austerity achieve ....practically nothing....it would lead to harsh cuts but would it increase business, result in growth, motivate people to do more...more importantly would it enable the affected countries to be able to repay their debts...a big NO !
It possibly would make them sink deeper.
The solution to the current situation is investing in growth of those affected countries, restore their self pride, give them the tools to stand on their feet and finally enable them to pay their debts.
Here the argument will be ...what happens to the agreed & settled deals...renegotiating them will break the Eurozone discipline ...yes it would but in the current eurozone so many other and much larger countries are affected.
The panacea to all this is growth. The zone has to usher itself into a place of growth , not for prosperity or anything but just to repay its debts to begin with and then for the overall growth & maintenance of their lifestyles.
The dubious credit for this wake up call goes to Greece but changes have been afoot in other countries to in France, in Italy and sooner or later through the power of ballot the people in the other countries will respond too.
Eurozone in its current shape is flawed , but the flaws cant be remedied over night. There should be slow progress towards that , a progress which ensures growth and dignity !
The current crises should be used to effect & elicit discipline, to build some semblance of an eco-political union, a basic pre-requisite for a common currency.
But whatever, i am a votary for an approach where the solution shouldnt be worse than the disease itself !!
Let the show begin !!!
