European Student Think Tank

As another expec­ted Euro crisis unraveled in Cyprus, a con­sec­ut­ive round of crit­ical exam­in­a­tions of the com­mon cur­rency is required. Instead of repeat­ing the same man­tras of lost inde­pend­ent mon­et­ary policies or severe dif­fer­ences in the European eco­nom­ies’ busi­ness cycles, another approach is needed. Per­haps the incon­veni­ent truth and the neg­at­ive unin­ten­ded con­sequences of the com­mon mar­ket are the fact that with one cur­rency, fluc­tu­ations in the European Union min­imum wage are inher­ently cre­at­ing det­ri­mental imbalances.

The cur­rent global fin­an­cial crisis has iron­ic­ally pro­duced a rather sur­pris­ing and benign unin­ten­ded con­sequence. Since fin­an­cial glob­al­iz­a­tion has shaped the world’s mac­roe­co­nomic paradigm after the Bretton Woods sys­tem, the cur­rent status quo has come under fierce cri­ti­cism. More spe­cific­ally, the dollar’s “exor­bit­ant priv­ilege” is no longer con­sidered to be a gran­ted right, in par­tic­u­lar after the reck­less­ness of U.S eco­nomic activ­it­ies prior to the fin­an­cial melt­down has become evident.

The euro crisis has taken the form of a suc­ces­sion of national crises threat­en­ing the integ­rity of the mon­et­ary union. The response, each time, involves heads of European states meet­ing in Brus­sels or Ber­lin to agree on a res­cue plan and hes­it­antly approv­ing the neces­sary improve­ments in European gov­ernance. After Ire­land, Por­tugal, Spain and Greece, does it even mat­ter who’s next on the cliff’s edge?

The EU should be fed up with gloomy news com­ing from weak links in the chain, but still, there appears to be much to con­tend with. It seems dubi­ous to argue that the European prob­lem can be solved in a fin­an­cial way. Struc­tural prob­lems need to be treated more col­lect­ively and they require more tolerance. [...]

EST announces its cooper­a­tion with the think tank “Atlantic Community”.

The Greek debt crisis illus­trates more than ever that the des­tinies of European nations are related to and depend­ent on one another. EU mem­ber states find them­selves with little choice but to invest in Greece to keep the Union from col­lapsing. And with good reason, because the fin­an­cial crisis goes bey­ond eco­nom­ical devel­op­ment and national budgets. Our way of life is at stake.

Great news: in anti­cip­a­tion of a more struc­tural solu­tion to the Eurozone’s debt prob­lems, the euro has been rising in com­par­ison to other world cur­ren­cies for sev­eral weeks. What the, more per­man­ent, sta­bil­iz­a­tion plan will look like has not leaked out yet. Per­haps it will include some plans to fully, or at least par­tially, start [...]

The euro con­tin­ues to be in tur­moil: one by one the PI(I)GS coun­tries are get­ting in greater dif­fi­culties. As dom­i­nos they are fall­ing to the spec­u­lat­ive attacks of investors: first Greece, now Ireland…the inev­it­able ques­tions is of course: who is next? Is it Por­tugal, Italy (I), or – today’s favor­ite bet – Spain. In the mean­time, the ‘strong’ and ‘sens­ible’ European coun­tries are bene­fit­ting from the increas­ing dis­par­it­ies in interest.

The euro zone is facing a deep crisis. Greece and Ire­land are close to bank­rupt. Por­tugal, Spain and Italy are most likely the next vic­tims. The call for action from the fin­an­cial mar­kets is grow­ing ever louder. And what are our Fin­ance min­is­ters doing? Indeed, they are talk­ing. A little essay on the struc­tural defi­cien­cies of the EMU-system.