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Tuesday, November 22, 2011

 

Who is to save Europe, German Chancellor Angela Merkel and President Nicolas Sarkozy of France, China or the US?


As the world continue going global whatever affects one country will certainly affect neighboring countries or even across the continents. This is true nowadays when you look at both political and economic spectrums. Building on ideas “What is the role of government in people’s life” I think that we as people across the globe gave too much power to governments. Be in capitalist or socialist (not to mention communism) countries people relied on their governments. People trust in governments and its institutions to do the right job for its citizens as well as to the country. However, what is still unknown to many is that from economic stand point, governments are different from businesses so, they are or should be run differently. As an example, a businessman will carefully count every penny that comes in or goes out on cash-flow while the government institutions manage public funds (tax payers). Also, most politicians tend to follow their own interest rather than working or championing for the welfare of people they represent. This phenomenon happened globally so the sentiment of angry citizens is spread all over. Yet, people continue to rely on government to take measures in tackling the inequality, poverty and financial problems. One thing to recognize is that to have gone global, losers and winners were created. As matter of fact, some countries are more advanced than others in intellectually, economically, politically, just to name few.

In this light, it is hard to know who would like to help Europe recover from its pressing financial crisis as all countries are on the edge. After all Robert Heinlein said it. “There ain't no such thing as a free lunch.” Therefore, building on what the president of World Bank Robert Zoellick said China may intervene in Eurozone financial crisis http://www.thisdaylive.com/articles/eurozone-seeks-bailout-funds-from-china/101540/. In fact, it is in China’s interest to help Eurozone because China has a significant investment in various European countries. For instance,
Alessandro Antonelli, an economist, John Cabot University reckons that China will be interested to buy European government bonds. During an interview on Reuters, he added saying that China will buy assets in those European suffering countries (Portugal about 10 billion dollars, Greece about 9.5 billion dollars etc). It is important to mention also that German’s export sector would benefit from the existence of Europe.

In the meantime, another important and crucial issue the Eurozone may be facing is how member countries have historical, political and socio-economical divergences. This may be a factor that some European countries tend to act behind the curve in dealing with common currency. According to Antonelli, there is also a credibility issues among Europeans. He gave an example in which top German politicians would say one thing today and a different one tomorrow. This may be true in the same footstep when German Chancellor Merkel was quote by Reuters addressing the Polish audience six months ago that “If the euro fails, then Europe and the idea of European Union will fail.” Next, Cimbalo on asserts that the Polish had the desire to join the EU but now those ambitions were set back given what is happening in current EU members. http://www.huffingtonpost.ca/jeff-cimbalo/euro-crisis_b_1086194.html

Nevertheless, what the US would like to do about the pressing European financial crisis? Given the controversy in this matter, people will give opposing views. If my memory can recall correctly, in the last televised republican presidential debate in Michigan some days ago, Herman Cain and Mitt Romney and others said that US should not intervene to rescue EU. I found their position as detriment especially when we continue to rely on (them) politicians. First, reading the report by James K. Jackson of February 1 2011 I found that Europe holds $2 trillions of US investment (about 70% of US investment abroad). http://www.fas.org/sgp/crs/misc/RS21118.pdf. in any case, US as global economic player should wary some. When a neighbor’s house is burning you cannot sit dull. You do something.



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