quinta-feira, maio 02, 2013

Saving the Euro is good, but ...

... saving our souls is better! 
Speaking earnestly and emphatically at the Estoril Conferences in Portugal today, Herman von Rompouy, the former Belgian minister who has been the President of the European Council for over three years said that  the Single Currency has been saved from the recurrent speculative attacks. 
And that it is now time to take immediate action to tackle the enormously high levels of unemployment with broad jobs programs especially focused on youth.  

Mr Rompouy was more convinced than convincing to the tough Portuguese audience who have suffered wage cuts of 30% + .   

Saving the Euro is good.
So is saving the European banks who foolishly lent too much, in an European version of the subprime loan abuses. But not  when nearly all   of the adjustment costs have been borne by the local taxpayers and the local savers of the debtor countries.
The Euro may not be safe for long if the net exporting countries such as Germany keep setting new trade records.

Structural reforms are indeed essential, especially making the labour market more flexible and oriented to productivity.

But the critical stuctural problem of the Eurozone,  the  intra-Eurozone current account CAB imbalances which persist and widen in the face o double digit unemployment, received scant attention from any of the speakers.

Has the Balance of Payments ceased to matter?
Is international trade theory dead? Or are we simply dead to international trade theory?

Mariana Abrantes de Sousa