(THIS ARTICLE IS MACHINE TRANSLATED by Google from Norwegian)
The euro crisis unfolds in four related areas:
The banking crisis: Everyone is struggling with a global banking crisis that has its roots in the disaster that hit American finance. But the eurozone has proven completely unable to handle the crisis. This is both a structural problem and a management problem. The euro zone has a central bank, but no central government, and national governments are without a supportive central bank while facing global networks of megabanks they can never access. Europe's response has been to propose a full union. The proposal is in principle bold, but is not followed up in practice.
debt Crisis: The credit drought in 2008 revealed that the eurozone's principle of perfectly segregated government loans does not work. The European Union established the European Financial Stability Facility (EFSF) after being forced to create a rescue fund without violating the European Central Bank and Lisbon Treaty Statutes. This was followed by a permanent system, the European Stability Mechanism (ESM). The establishment of these new institutions solved the difficulties of the immediate financing of a number of member states, but the erroneous objectives of no common debt were maintained, and thus the crisis could not be stopped. This prompted the European Central Bank to issue a new measure in the summer of 2012: First, the bank would monetize public debt through a policy that was never implemented (the OMT program), and then, in 2014, the ongoing quantitative easing based on it. some strange principle of buying equal amounts of all Member States' public debt in relation to the size of their national economy, but not in relation to the individual country's deflationary spiral. All these measures have helped to reduce the credit drought, but they have not made it possible to put the debt crisis behind or stop the deflation that is now spreading throughout the eurozone.
investment Crisis: Absence of investment in Europe is a threat to living standards and the competitiveness of European economies. Only Germany has made a profit after the year 2000. The accompanying trade imbalances thus ensured that demand and investment collapsed in the deficit countries as soon as the crisis set in in 2008. The adjustment burden fell on the deficit areas alone. But these are not able to bear such burdens without a mechanism that triggers a reaction in the surplus nations. Thus, the stage was set for regions to experience an investor being used as more than anything else even needed investments. Europe as a whole ended up with few investments, and with an uneven distribution of investments between the surplus and deficit regions.
Social crisis: Many years of severe austerity have affected everyone living in Europe. Millions have lost their daily bread, from Dublin to Lisbon and in the former East Germany. Unemployment is spreading everywhere. The number of homeless is increasing, and more and more people are starving. Pretty-
ions are cut, while taxation on daily necessities continues to rise. For the first time in two generations, many Europeans are beginning to question the European project. Nationalism is on the rise. Even Nazi parties are growing in strength.
Here are three suggestions:
A banking program, case by case.
We propose that banks that need to be recapitalized be placed directly under the European Stability Mechanism (ESM), and not, as is currently the case, that the state in which it is domiciled borrow money from the ESM to recapitalize the bank. In our proposal, it will be the ESM and not the national government that restructures, recapitalises and solves the problems of failed banks. ESM's funds are used for this purpose.
Limited Debt Conversion Program (BGKP).
The Maastricht Treaty allows a member state to take out a loan equivalent to 60 percent of national income. Most member states of the Economic and Monetary Union (EMU) have crossed this line after the financial crisis in 2008. We propose that the European Central Bank offer member states to convert as much of existing debt as 60 per cent of GDP into debt to the central bank (Maastricht -fill-up debt ratios, MOGA), while the excess debt remains the member countries' own obligation.
3. A social solidarity program to combat poverty.
We would recommend that Europe immediately implement a social solidarity program that guarantees food, and that all Europeans' basic energy needs be met. This can be done by introducing a food label program based on the American model and a European minimum energy program.
Excerpt from Yanis Varoufakis: And the weak suffer what they must? Europe's crisis and America's economic future. The chapter "A modest proposal to resolve the eurozone crisis". Recently published by Solum Bokvennen. Translated by: Karl Henrik Bingen.
