Are PIGS To Kill Euro?

Are PIGS To Kill Euro?

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THEY are lazy. They are irresponsible. And they do politics either in a dark backstage (mafia) or in the streets. This is how the rest of Europe perceive PIGS – Portugal, Italy, Greece and Spain.

No matter how compelling one´s ecperience may be, I agree that a little more sophisticated explanation is needed. Lets have a look at some numbers. Although the macroeconomic indicators are not the only and absolute truth, a brief look at them could corroborate the first paragraph.

2009    Debt (%GDP)       Deficit (%GDP)      TI CPI
EA16                  78,2                         -6,29                  n/a
SK                       34,6                          -6,3                   4,5

Por                     77,4                          -8,0                   4,3
Ita                      114,6                          -5,3                   5,8
Gre                    112,6                         -12,7                 3,8
Spa                     54,3                          -11,2                  6,1

Source: European Comission, Transparency International

The big problem is that PIGS are causing a serious trouble to the whole Eurozone. No regard to economic character of the core of the problem and the consequences, I do argue that the solution must be political. Which at the same time makes it almost impossible.

As Stefanos Manos rightly explained to Lidove Noviny, the greek illness could be curable easily. Its just the courage of politicians to make a little painful step and loose some political points. If Latvians and Hungarians are able to cut their public finances by 20 to 30 per cent and behave more responsibly, why not PIGS?

And here we come to the core of the problem – and I must repeat again its a political one – there is nobody to force them. Its the same reason why one of the European social models is called “Mediterranean”. Parties and political elites in PIGS (to more or less extent) taught their people they can get much money, social benefits or other form of societal bribe for almost nothing. People in PIGS learned they can enforce welfare by just threats of senseless protests and riots.

Unfortunately there is nobody in Brussels (Frankfurt) who could bring PIGS to their senses, since we are talking about two-level problem (elites v. people). Some say IMF might have a magic wand in its hand. However, only a suicidal government would invite IMF to show its tricks voluntarily.


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