12 Aug 2012 7:22 PM:
The problems are multi-layerd and cross-discipline, which is likely why they will not be solved. It's not just economics, it's all deeply political and nationalist.
For example, there is a relatively simple problem to the bond rates which are curretnly threatening Spain, and the junk status of Greek and Irish debt which makes it impossible for her to borrow from the open market. This would be to mutualise Euro debt accross all EU states. Also the ECB could be empowered to buy up debts from sturggling member states, getting high interest debt off their books.
BUT, because of nationalist sentiments among EU members, key states have (and will continue to) block this, and so although the economics are reasonably simple, it just won't happen for political reasons.
As such, there are plenty of solutions, but none that will really come to the fore as long as right-wing nationalist sentiment is the dominant political chorus in Germany, Finland et. al.
Within Spain, there is actually not a huge amount Rajoy can do, and neither does he have much desire to do anything anyway. He is largely at the mercy of the ECB and the still-functioning Eurozone economies. Thankfully for Rajoy, they are largely on his side as far as flogging off state assets to his donors is concerned, but that isn't going to help the economy (in fact, it might just help push it deeper into the red).
UNEMPLOYMENT - Not an EU priority. Can only really be addressed long time by major stimulus to manufacturing and construction. Neither Rajoy nor the EU care about this
HOUSING CRISIS - THis is an EU priority, but it would require Rajoy to massively reform the banks through forced mergers and a toxic asset scheme. He has no apetite for the first and would need to go back again, cap in hand to the EU for the second, which would make him look bad (even though it makes sence).
BANKING REFORM - The EU is semi-interested in this, but like housing it would mean Rajoy having to take on the banks, which he has absolutely no desire to do.
BEUREAUCRACY - Rajoy and EU both desperately want to hack away at the public sector. However, both want to do it in a different way to one that would actually address the underlying problem. Rajoy and EU both want to privatise and contract out potentially profitable parts of the public service such as public hospitals, schools and infrastructure like Correos, RENFE, ADIF and AENA. However, the main problem lies in the civil service and direct government departments wchih have stone-age administrative practices and consequently low productivity, which needs huge modernisation and reform of work processes. Not being profitable, this is unlikely to happen - though a culling of the workforce with no sigifcant changes or imrpovements to actual procedures is highly likely, which will have the sole effect of exacerbating unemployment and making the beureaucracy even slower as three people attempt to badly do the jobs previously done badly by ten people.
MIGRANT WORKERS - The crisis is has led to a lot of African and E. European workers in the south to loose their casual jobs. They are a ptoential law and order time bomb and Rajoy doesn't know what to do. The farmers want to keep them as a useful pool of labour - higher unemployment keeps down the wages and makes the workers easier to control, but the local populace resent them. The only real solution is to enforce the laws that require workers to be properly ocumented and be paid a minimum wage, but that is eaier said than done given the rampant corruption and transient nature of the workers, and bitter resistance amongst farming companies.
Thread:
What does Europe need to sort out this mess?
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