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Posts Tagged ‘euro zone’

Greece’s Exit From The Euro Zone Approaches, While Europe Fiddles

Posted by Ram Kumar Shrestha on May 25, 2012

By Mark Gonglof

Greek Exit Euro Zone
A Greek flag flies next to a statue of ancient Greek philosopher Socrates in the center of Athens on 23 May, 2012. European leaders are considering the repercussions of Greece leaving the euro zone.

Europe and Greece are at the stage in their stormy marriage where they are consulting with divorce lawyers. And we may all feel the pain of their breakup.

On Thursday a Markit Economics indextracking European service-sector and factory activity in May tumbled to its lowest level since June 2009, suggesting a deeper economic contraction. A separate Markit index of German factory activity also tumbled, as did an Ifo Institute index of German corporate confidence, both suggesting the core of the European economy is suffering, too.

Meanwhile, new public polling in Greece showed the anti-austerity Syriza partygaining more support than ever ahead of elections scheduled for June 17 — even as 85 percent of Greeks polled said they wanted the country to stay in the euro zone.

A formal European summit is scheduled for the end of June, several days after the Greek election. Many observers fear that, by then, it will be too late for decisive action to keep Greece in the euro zone.

The euro fell on Thursday to $1.253, its lowest level in nearly two years. But European stocks rallied, in part on a hope that the European Central Bank will come to the rescue with rate cuts and fresh support for struggling sovereign debt. Germany’s DAX index edged up by about 0.5 percent, while France’s CAC 40 rose 1.2 percent. Read the rest of this entry »

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Whither the European (Dis)Union?

Posted by Ram Kumar Shrestha on November 14, 2011

by 

Is significantly greater integration the surest way to prevent both the euro and even the entire European Union from

A droplet of water falls from a tap in front of the euro sculpture at the European Central Bank in Frankfurt, Germany, Friday, Nov.11, 2011. (Photo: Michael Probst / AP)

blowing apart? Or is EU federation–and the basic powers national governments now wield being weakened in the process–exactly the kind of radical fusion certain to send countries jealous of their sovereignty fleeing for the exits? As euro zone members now consider drastic, big-bang solutions to overcoming their currency’s crisis, leaders of all 27 EU member states find themselves grappling with the question of whether more or less Europe is necessary to safeguard the bloc’s future.

The spread of the single currency’s existential crisis–which began as a debt problem initially believed to imperil only a few small nations before expanding to shake Europe’s biggest economies to their foundations–mirrors the rising pressure posed by a similarly essential dilemma over the wider European Union project, and evoking similar denial from leaders. While most officials agree that deep and dramatic measures must be undertaken to finally contain the debt-driven euro emergency, their concord evaporates over the different options for action—especially centralization of budget and debt rules, and giving real intervention power to the European Central Bank. Central to that disagreement are clashing views over just how bound together EU members should be—a long-standing confrontation between Euroenthusiasts and Euroskeptics that has resurged in crisis anew. As such, moves to save the euro will probably shape the direction—or even future—of the entire EU as it seek a collective horizon to look toward.

News reports Nov. 10 stated France and Germany were consulting partners on potentially radical harmonization measures between euro zone members—or at least those capable of and willing to accept far stricter budgetary and fiscal rules that greater convergence would involve. If true, it suggests the euro zone’s two biggest economies are contemplating tossing unsustainably indebted currency partners out of what would become a smaller, tighter euro ship. German Chancellor Angela Merkel denied those reports, insisting scission of the euro 17 wasn’t an option. Yet her comments elsewhere indicated the status quo could not endure, either. Read the rest of this entry »

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