Jack Ludtke
Business Manager
America and the world will be watching Europe this fall as European leaders try to strengthen the Euro before the euro zone can be weakened any further. The European Central Bank President Mario Draghi will be unveiling new measures this week that will widen the scope of the ECB’s power over all European banks. These measures promise to further centralize the funds within the EU to the ECB, allowing countries such as Greece and Spain to obtain bailouts more easily.
These measures move ahead despite Germany’s staunch disapproval of any further central control of their national bank, the Bundesbank. In the next month, Germany’s Supreme Court will announce whether the 500 million euro bailout given to Greece is legal, with definite ramifications if it is deemed illegal. On top of all of this, French President Francois Hollande and German Chancellor Angela Merkel have expressed conflicting views on how they feel the euro zone should move ahead, highlighted by their public disagreement at a summer EU summit.
Because of the further struggles of Greece and the general aura of urgency within the EU, experts speculate that the leaders of the coalition will at least come to a conclusion about how this issue should be dealt with by the end of the year. Obviously, this does not bode well for the countries within the EU for the immediate future. European leaders, undoubtedly now under immense pressure, will only be more and more pressed to come up with a suitable solution as time goes on.
As of now, the best solution would be to probably give Greece a third bailout, primarily funded by the Germans, and ramp up the guidance given by the EU within Greek affairs. This would dramatically increase German taxes, while taking a tremendous amount of pressure off of the other European Union nations. Additionally, this monetary support would need to be coupled with further austerity measures for it to be successful.
Austerity measures are an affective way for the German government to monitor Greece’s growth and ensure their condition improves over time. It would be crucial to stress that the Germans are not the only ones involved in the guidance, and that it is very much the responsibility of the entire euro zone to ensure the Greeks’ survival. The country needs a large culture shift away from the highly corrupt state it once was, and it will take a lot of work to create a new, healthier culture within the country.
The United States should definitely be taking note of the crisis now going on in Europe, and learn from the mistakes that European leaders have made. Even though America is still in fairly good shape compared to these countries, the divisiveness that has plagued the EU is becoming more and more visible within the United States.
Bi-partisan struggles have deadlocked American policy and threaten to stymie any action the country might make fiscally to help its banks. It is now time for the American government to put more effort towards a harmonious agenda instead of standing pat on their own viewpoints. If they continue this way, America will only find it increasingly hard to find agreement in these two camps, making any political action slow and possibly ineffective.
