VIEWS: 7 PAGES: 3 CATEGORY: Social Sciences POSTED ON: 7/14/2010
[...] it looks as if all these impossible events have been happening in the Euro area, so what should the club do about it? [...] the immediate crisis must be resolved; no time now for lengthy discussion of grandiose plans.
THEWORLDTODAY.ORG MARCH 2010 PAGE 27 GREECE AND THE EURO Vanessa Rossi, SENIOR RESEARCH FELLOW, INTERNATIONAL ECONOMICS, CHATHAM HOUSE Get A Sin Bin This is the crisis that could never happen. European leaders gathered in Brussels in mid-February for talks on the Greek debt problem probably expected to wake up suddenly and find it was all a bad dream. This may also explain the seemingly erratic outpourings from these meetings, lurching from promises of support – club members stand shoulder-to-shoulder – to rather harsh demands for Athens to make tougher budget deficit cuts, with no sign of any money being put on the table in support. Greece may be wondering why it was there, like an unwelcome ghost at the feast. The truth was the Eurozone had no plan. t HE EURO CURRENCY ENTRY RULES, MEMBERSHIP rules, and the Maastricht Treaty – the blueprint for the single currency which came into being in 1999 – were all designed with one critical purpose in mind: to guarantee that prudence governed member government’s budgets and that public sector debt would never reach a level that could possibly pose a risk to the stability of a member state. There is very little else required or said about economic policy and other important balances and targets. Indeed in 2002, Romano Prodi, then President of the European Commission, famously caused a furore for calling the Maastricht rules stupid, to the annoyance of some, but the delight of others. In the tradition of a gentlemen’s agreement, it was assumed that members would never cheat or make a mistake. And global crises that could damage the whole monetary union ‘club’ in such a way that deficit and debt targets would be smashed could never happen. No need to plan for something that was impossible. PA R E S H / T H E K H A L E E J T I M E S / D U B A I THEWORLDTODAY.ORG MARCH 2010 PAGE 28 P R U D E N T TO P R O F L IG AT E got around to it; all very complicated no doubt and why There are some clauses in the Treaty about bail outs. bother as the probability of a nasty event was so low? Absolutely, there can be none; no concept of bail outs, collective or individual. Indeed, they are deemed illegal except in circumstances of, say, natural catastrophe. Perhaps this is F I N D T H E M O N EY what has happened to Greece? Lack of tax collection and This cannot continu
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