Democracy and ‘hypocracy,’ the twins of culture anno 2012. In this respect I remember having read some ideas of Alexis de Tocqueville, a French political philosopher (1805-1859) who visited America to see how democracy worked. One of his sayings was: ‘There are many men of principle in both parties, but there is no party of principles.’ And what about this: ‘The American republic will endure until politicians realize they can bribe the people with their own money.’
On to the crisis: I just saw on TV an interview in Holland with Professor Roubini (university of New York), called ‘Dr. Doom’.
As everyone, he worries about the Greek misery. Obviously they invented the tragedy and perform it in a very living way. The contamination to Italy and Spain however, is his heaviest sorrow.
The so-called rescue fund of Europe contains about 750 billions Euros. According to him, we need three times as much. We will not be able to reach that amount; it would represent about 20% of the European yearly national product.
Another scenario is ECB efforts to glue and stabilize the imbalance of debts and wealth, but their reach is limited. Legally and financially, they are not destined or equipped to create loads of guaranteed eurobonds. The circulation of money can be extended, but has its limits. The inflation phantom is everywhere. But… they made a big mistake to hike up the interest rate at the beginning of this year, which contributed to the barely achievable recovery.
And Greece? What does she think about that? ‘Wild’ bankruptcy of Greece and perhaps Portugal would cause a crisis heavier than 1930.
A guided ‘fading away’ and ‘resurrection’ of the Greek economy and after that the escape out of the euro might be the only way to keep things in hand. The problem is that we do not have the science, leaders or time, to create this process quickly.
It’s a ‘learning by doing’ process and along the road we will have to create a prudent system of financial science, while structuring the national debts. This, in connection with a lowering of the euro, with the ideal being parity with the dollar, that in turn would obviously harm the weak American economy. The so-called ‘spread’ between the dollar and the euro is between 1.30 and 1.50. A deepening to 1.15 would be better. That would mean that also the peripheral weak countries like Greece and Portugal have a chance to export, which stimulates their economies. But, America has even more problems than we, which might end in another depreciation of the dollar, in the longer term favourable for their export position and hopefully for the employment rate in that country.
So let’s start right away to make choices and decisions please. By solving the Greek problems with tight control and after that hike up the emergency fund! Oh, sorry, I forgot that we live in a democracy. The discussions and talks between our so-called ‘leaders’ will be time consuming and retard the process. Do we have real leaders? We need them badly, but as the above mentioned De Tocqueville said: ‘ History is a gallery of pictures in which there are a few originals and many copies.’