Do you agree with Merkel that it will take years to solve the Euro crisis?

German Chancellor Angela Merkel wants to implement “a Fiscal Union with strict rules” to address the root causes of the widening financial crisis in Europe. Devote 3 minutes to learn more about her views on sorting out the problems in the Eurozone:

It will, according to her, take years to sort out the problems but  EU treaty changes are  needed to introduce greater European powers. She dismissed criticism that Germany wants to dominate Europe as misleading.

Merkel told the Bundestag that the creation of Eurobonds will not contribute to overcoming the crisis and warned that saving the Euro will take years and that Europeans face a marathon to restore lost credibility.

Flawed from the beginning

Many of us knew that the Euro mechanism was flawed from the beginning and it’s now obvious just how flawed it is. How can you have one central bank for economies as diverse as Greece and Germany? A currency without a “state” unfortunately complicates the concept of a single currency. Even Jaques Delors now admits it was “a fault in execution”. That Europe face an economic downturn is now not just a maybe but a definite. Just a quesion of for how long and which is the best way forward to make Europe grow again.

Some experts believe austerity is the wrong way to solve the crisis and instead advocate increased spending. Or maybe Russia joining the Euro? Vladimir Putin expressed an interest of joining a year ago and adding a well performing economy like Russia would make economic sense. But unfortunately it’s not as simple as that.  Maybe Russia will join in the future?

There is also speculation that  Euro member states with healthy economies will leave the single currency. Many believe Finland could be the first one to opt out.

Do you agree with Angela Merkel that it will take years to sort out the Eurozone’s troubles? Are her views on how to work out the problems with the single currency correct? Or do you believe that increased spending would be a better, and faster, way forward? Or maybe Russia joining would do the trick? Is the Euro actually worth saving? Maybe it would be better to dissolve it and face the hardship it entails now, instead of in the future? Will countries with well performing economies leave the Euro? If so, do you believe Finland will be the first one out? Do you believe the Euro will survive long term or will member states go back to their old currencies again?

video: RussiaToday

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42 Responses to “Do you agree with Merkel that it will take years to solve the Euro crisis?”

  1. Rajendra.Deshpande. Says:

    Hi.!! Catarina.!!.very interesting topic.!!.
    I dont think thers need to be panic.European
    nations have more emotional ,culture & identity
    comapred to any other continent.So the problems
    are emotional as well as finacial.
    If Russia Joins then it will be realy have impact.
    But it will realy worth contacting Gulf nations.
    Their economic foundations are more sound.
    and they will be more willing to be part of europian
    council,and they too will get a bigger paltform.
    What do You think.?
    Rajendra Deshpande.
    Sales & Marketing Consultant.
    International Business.

  2. catarinaalexon Says:

    Glad you find the topic interesting Rajendra. Not sure why you are suggestion the Gulf countries should join the European Union though? It's impossible because they are not European countries.

  3. Alex Says:

    I believe that some belt tightening is necessary. One can't borrow with obvious intention to avoid repaying. It appears as done deal that half of Greek debt will be written off which means that the same amount will disappear off few balance sheets. National borrowing should be capped as a function of few factors including GDP and its growth.

  4. catarinaalexon Says:

    Presumably you agree with Merkel then, Alex?

  5. tombrysonwriter Says:

    I think Angela Merkel is doing her best. But she and her country, Germany are between the proverbial rock and a hard place. – smaller countries like Ireland, Greece, Portugal – and soon the recent eastern European countries as well will get hit.. The 'Market' is King. They speculate and destroy economies.Believe me, even the mighty US dollar is not immune. The 'Markets' rule. They are out of control. See what I said a while ago on my blog.

    Website tombrysonwriter.co.uk
    tombrysonwriter.wordpress.com

  6. catarinaalexon Says:

    Agree with you Tom.

  7. David Says:

    Depends on the group that develops the solutions to meet the challenges. What if the poor decide the best solution?

  8. GuyW Says:

    There's no question that the way the Euro was implemented was deeply flawed. A single currency without a single over-arching financial authority that can impose proper financial control is guaranteed to fail. You either have a proper Federal system (like the US), or independent currencies.

    Frankly I can only see two ways out of this:
    1. To retain the Euro for the strong central economies and push those that have overspent, in contravention of the EU budget rules, out of the Euro. They can retain the Euro as legal tender, but it would have to float against their own currencies.
    2. To break up the Euro completely, leaving it as a free-trade zone.

    It's not going to be pretty, whatever happens…

  9. Warren Says:

    Any change they attempt are going to take some time to implement. Will be interesting to see what direction they take.
    My recent post Having a Can-Do attitude

  10. catarinaalexon Says:

    Agree with you Guy. What annoys me though is I have known from the beginning that it was flawed. Why couldn't politicians realise that as well. They have a multi tude of advisors. My ex advised Eddy George, then gov. of the Bank of England to stay out of the Euro. Surely they knew what was going to happen.

  11. catarinaalexon Says:

    The poor, David?

  12. Robert Sharp Says:

    I think right from the start it was doomed. They should have started and outline everything correctly and mapped everything out. If they would have had an exit strategy it would have never got htis far.

  13. Susan Oakes Says:

    From what i have read Catarina I agree with her. One reason is they are having trouble just getting a plan agreed upon. I wonder what will happen when they actually try and get to the implementation. I also agree with you it was flawed from the beginning as you can't have weak economies tied to strong economies as it doesn't make sense. Do you know if there is any real talk about breaking it up or is that too hot a political subject?
    My recent post Profitable Business Through Specialisation

  14. Jordi M. Says:

    Good night Catarina, it's the first time I take part in discussion online like this. I congratulate you and all the people who have posted some comment in order to contribute to change opinions in differents countries. As far as the sentence is related I think that Merkel is right. Besides, I think that Merkel's words have a great influence in the economy. It's for this reason that I think that she would have to measure more his words some times (as with the cucumber crisis in Spain). In this occasion, I think that she's right and we need a Fiscal Union with strict rules. And be more severes with our decisions. Countries that do not meet ……. OUT.

  15. Kostas Says:

    Actually the solution will not come from politicians, in history there are not dead ends and usually crisis escalating pretty fast and lead to something that most people don't expect. In my opinion In the few next months there will be cosmoginic changes in Europe and as a result to the whole world. There are two options European Union will either unite in a federation like the USA or every state will take its way.
    My recent post How You Can Really Make Money With Adsense

  16. Sanjeev Says:

    Nice topic, a topic where lot of debate can be done. Euro is a big economy and it will find its place as most of them would. I think the main thing is going with the world's economy and open up for international markets. It has started to happen which will improve the system.
    My recent post What I Learned From My Ten Days Unwanted Holiday

  17. Rolande Mbatchou Says:

    "Eurozone’s troubles", I don't think that the Eurozone leaders fully understand the SOURCE of the troubles that Europe is truly facing and that is probably why they are having a really hard time fixing things. To add, that is why similar crisis keep on reoccurring. A lot of the troubles drills down to poor risk management at many financial institutions, if they can fix that and stick to stricter rules on Basel/Omnibus II, etc, a lot of the market anxiety will diminish. I talk a lot about risk management on my blog: letsoptimizerisk.wordpress.com!
    Thanks for the post that was a great read and watch!
    My recent post WordPress.com Bloggers Who Covered the Biggest News Stories of 2011

  18. GuyW Says:

    The problem is, in one word, politicians. There was no way any of the governments in the Euro zone would allow themselves to be subject to (or, as they see it, subservient to) a central European one. That's why they chose a nonentity as European President – he won't take the limelight from the country Presidents/PMs.

    They would have known that a lack of central control would ultimately doom the currency but presumably thought that this would not happen "on their watch" and so kept going down the flawed route.

    That's why I think the currency ultimately has to disappear. It may remain as a trading currency in the Free Trade Zone for ease of inter-country trade (albeit one that is pegged against different national currencies from time to time), but I cannot see the President of France, the Chancellor of Germany or any of the other national heads of state giving up fiscal control to a central government. Consequently, the currency has to go.

  19. Lilach Bullock Says:

    Interesting topic which I really should learn more about – I guess I hide away from it a little as it depresses me. Sadly I agree, I think we've got a few more rough years ahead of us – I hope I'm proved wrong though:)
    My recent post Twitter Lists and why you should be using them

  20. CJ Tom Says:

    Totally agree Guy this is a political problem, initially it was a political coup but when the world went pear shaped, sh*t hit the fan. I guess anything which isn't built on strong fundamentals will not last and this is a fact which we are now witnessing

  21. catarinaalexon Says:

    Yes Robert, that's true.

  22. catarinaalexon Says:

    Yes Susan. Breaking up the Euro is too hot from a political point of view. Estonia actually joined this year. The problem is that the EU has become an organisation for the rich supporting the poor. And to change that is easier said than done due to the fact that all members have a say. And now we see the result. It doesn't help that S&P, again, are threatening to down grade.

  23. catarinaalexon Says:

    Glad you like the discussions Jordi. Let's see what happens this week. Already S&P are threatening to downgrade, just as they did with the US last summer. Hardship is definitely the future for EU citizens.

  24. catarinaalexon Says:

    Glad you like the topic Sanjeev. The EU is open internationally and has been for a long time.

  25. catarinaalexon Says:

    Glad you like the post Rolande. Yes, speculators are a huge reason for the problem. And now S&P is threatening to downgrade Euro countries. But the fact that the Euro was flawed from the beginning made what's now happening inevitable. Let's see if the Euro survives as a currency long term?

  26. catarinaalexon Says:

    Spot on Guy. Personally doubt if the Euro can survive long term.

  27. catarinaalexon Says:

    True C J.

  28. loris Says:

    Catarina, I believe the reference was to Council of Europe, the international court for Human Rights with wich Russia and Turks are already part of.

  29. catarinaalexon Says:

    Thank you for your comment Loris. But you lost me, which reference?

  30. DiTesco Says:

    Hi, here’s my two cents…

    I lived in Portugal for quite a while and actually had the chance to be there when the “Euro” was launched. At that time, there were mixed feelings about it as having a “single” currency while an interesting concept was quite difficult to manage. Europe has very different cultures and the rules that were set out while easy for a country like Germany to comply, was not necessarily true for other minor economies like Portugal and Greece. As it so seems, the fears back then are starting to show up now, but I am of the opinion that the “euro” is not going anywhere and that will most likely take years before it stabilizes again. My guess is that the “rules of engagement” will change and that a “governing” body that has actual executive powers will most likely dictate the future of the currency. Problem is that strong economies will want a much larger “power” to control the Eurozone economies and its success will depend if a particular country is prepared to let go of their sovereignty. Too complex to make any sort of predictions, really, but I do hope that they get their act together sometime soon and find a plan that they can stick to :)
    My recent post Content Curation: The Next Big Thing?

  31. catarinaalexon Says:

    Yes DiTesco, that's more or less what we all agree on. Let's see what happens on the EU meeting end of this week. An added problem now is S&P, again, interfering in the world economy, by threatening to downgrade 15 EU countries, including France and Germany. Interesting timing since the European Commission announced last month plans to tighten regulation of rating agencies.

  32. catarinaalexon Says:

    Viviana, agree with you that not all countries progress at the same rate. The single currency however, has existed since January 1st, 1999.

  33. Jeannette Paladino Says:

    The Euro is on the verge of collapse because linking very disparate economies and cultures doesn't work. In the U.S., for example, we have 50 separate states with their own laws, but we are bound by a constitution and a shared culture. Paul Krugman, a Princeton professor and op-ed columnist for The New York Times, has written extensively about the current Euro crisis. If you want to read what this Nobel Prize winner thinks about it, just Google him.
    My recent post Letting Our Imagination Take Us Beyond Our Limits

  34. catarinaalexon Says:

    Exactly Jeannette, that's the problem with the Euro. Have read what Paul Krugman has to say.

  35. catarinaalexon Says:

    Yes Stacy, no matter what happens it will take long before the mess is sorted out.

  36. catarinaalexon Says:

    Thank you Jennifer. They have talked about that in Latin America and the Gulf for a long time. Hope they learn from the mistake of the euro if they go ahead with it. If not, they are in for the same problems we see now in Europe.

  37. catarinaalexon Says:

    That's one way of looking at it Srinivas. Do you really think that organisations like the European Union, ASEAN and APEC will disappear?

  38. Catherine Lockey Says:

    Hi Catarina,
    I wish I had an intelligent opinion the Euro and the European debt crisis, but I do not. I only hope every country in Europe will look closely at the financial and political mistakes made in the U.S. and not repeat them.
    My recent post Justifying Online Video

  39. catarinaalexon Says:

    Glad you do Catherine. It will affect you in the US as well. Very much actually.

  40. keepupweb Says:

    Hi Catarina,
    I'm with Catherine on wanting to offer an intelligent opinion but this topic is way out of my comfort zone. I did watch the video and I read through all of the comments. As always, I find your articles both informative and challenging. Thanks for sharing this with us (and making me think).
    My recent post What the Heck is an RSS Feed?

  41. catarinaalexon Says:

    Thank you Sherryl. Glad you find my articles informative and challenging.

  42. catarinaalexon Says:

    Presumably that means that you don't believe the Euro is worth saving, Shabeeb?

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