By Mortimer B. Zuckerman – The facts of the eurozone showdown are brutally simple. Growth is stalled, even in the most successful member, Germany, and in many countries it is contracting. Unemployment is high and soaring; today Spain’s unemployment rate is some 24 percent. Banks are collapsing, and over-indebted governments are running out of both money and credit.
Germany wants Greece to stay in the eurozone but it seeks to enforce an internal devaluation through reductions in Greek wages and benefits. But this is difficult for democratically elected leaders. For example, labor costs in Spain are still rising although almost one in four workers do not have jobs. How deep would unemployment have to be for wages to start to fall?
It would amount to a cut in the average Greek family’s standard of living by 20 percent or more. That severe a shock is probably beyond the democratic limits as to how far any individual government can go without a political upheaval of unpredictable consequences. more> http://tinyurl.com/cdsu52k
- Panic in Spain as money flies out of country and head of European bank says Eurozone is ‘unsustainable’ (dailymail.co.uk)
- How to solve the economic crisis, Decca Aitkenhead, Sydney Morning Herald