In a recent interview for the Italian magazine L’Espresso, former finance minister of Greece Yanis Varoufakis announces the formation of a new Pan-European movement in February 2016, with the aim to democratise the EU, rather than working for its dissolution.
“Without a doubt, if we continue along the lines of present policies, that have failed so spectacularly, the centrifugal forces will get so strong that the Eurozone first, and then the EU, will fragment. … No one can tell where the rupture will take place. Maybe in Greece, maybe in Italy, maybe somewhere else. Like in the case of the Soviet Union, where it was impossible to predict how its end would come … we know that the present course is catastrophic for the EU even if ignorant of what will trigger it.”
More political instability looms in another southern European country. No clear majority emerged from the ballot box in Spain yesterday, and the two-party system seems to be a thing of the past. Neither a centre-right coalition between the PP (28.7%) and the young party Ciudadanos (13.9%), nor a centre-left one between the Socialists (22%) and the new left formation Podemos (20.7%), can form a majority government.
There are other options, including a minority government, or a grand coalition between Socialists and PP. It’s clear that the old parties are rapidly losing ground. But are the new arrivals really that enticing?
As far as the left is concerned, Podemos did very well and above expectations, but its close alliance with another failed attempt at real change, Tsipras’ new incarnation of Syriza, casts more than one doubt. Before you hail another victory of the left against the “bad guys” of technocracy, be reassured that Podemos has no real intention to contest the euro, reject all that is old in politics, or reverse austerity. All these desirable goals run the risk of becoming empty slogans appropriated by certain sections of the rising new left to rally votes without a real plan to deliver.
A well-written recent article on Slate points out that most governments today can borrow on their bond markets at incredibly low rates. The article goes on to suggest that what governments should do is to borrow substantial amounts to inject into the economy to kickstart growth. Forget about Italy, Spain and Greece, rates have never been so low for most countries, says the author. My question to people who know more about the ins and outs of the global economy would be: aren’t these low rates connected to the unsustainably high rates of major economies like Spain and Italy? Is there a message there from investors saying to other countries “if you do the same, you’ll end up like Italy and Spain”? Or is there really?
Posted in World
Tagged bond markets, crisis, germany, government borrowing, greece, growth, injection, italy, neo-keynesian, spain, usa