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People's Daily Online>>Opinion

Europe will go through a tough time in 2012

By Liu Mingli (Guangming Daily)

09:26, January 21, 2012

Edited and translated by People's Daily Online

At the beginning of the New Year, under the shadow of debt crisis, 2012 seems inconceivable for the Europeans. As German Chancellor Angela Merkel said, 2012 will be a "tough year" for Europe.

Entering 2012, there still seem no signs of improving for the crisis. The following two means are generally acknowledged as effective to dissolve the crisis: firstly, issuing joint bond in the euro zone to directly relieve the financing pressure of the debtor nation; secondly, the European Central Bank implements the monetary policy of "Quantitative Easing" to assume the role of final lender. But these two alternatives will not become reality out of the firm objection of Germany, the biggest economic entity in the euro zone.

After the European Summit on December 9 last year, this train of thought has been very clear. But the "fiscal union" is not enough to solve the debt crisis. On the one hand, what Europe currently promotes is not the real "fiscal union". Its nature is to strengthen the coordination of economic policies and the supervision of fiscal disciplines without realizing the transfer payment among member countries of the euro zone. The fiscal revenue still belongs to the member countries, and the budgetary outlays are used in each country itself, which means that one country would not assume the debts of another country and the debtor nation has to pay the debts by itself.

On the other hand, Europe's creation of "fiscal union" will not be smooth. The "fiscal union" planned by the Europeans actually uses Germany as the model to change other countries. But the suitable economic model of a country depends on factors of its geography, history, culture and religion. Although European countries are similar, there're still many differences, and it's still unknown whether the German model is suitable for other countries employing it.

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Heinz Stiller at 2012-01-24188.60.9.*
In the age of the internet, one should think that geographical distance is no longer important. But it is. Obviously, distance of mind-sets and of informational backgrounds remain. China has long been complaining about this, effectively, when criticizing American opinions about China. But Mr. Liu's comments about Europe are sadly ignorant of the most basic facts about Europe. Reading predominantly American or English sources inevitably leads to pitfalls regarding the situation of continental Europe. Their writings about continental Europe are about as distorted as their writings about China. Chinese authors should acknowlegde this, as it has become more than obvious in the dealings of rating agencies.Of course, economic thinking, as all thinking, is subject to certain sociological basic laws, e.g., the perceived need to join a majority consensus. But scientific analysis is anathema to this way of thinking. It must rely on independent analysis of numbers and facts. And Mr. Liu's analysis, unfortunately, does not attempt this. His depiction of the European economic situation has absolutely nothing to do with reality. Chinese authors should not not make the same mistakes concerning Europe as American authors make concerning China.
romanov at 2012-01-2280.94.16.*
2012-1-21.UE to fall The end.Chat a to grow old woman.Merkel not have a right say a history and culture! she not know how have this a sense.Shortage her honour as germany.She as politic to be leader to hide crime genocide to commit by germanys border to nation germany.Shame Judas.
Canada at 2012-01-2270.36.49.*
A bank currency strategist said the Portugal bond market indicates serious problems, and Portugal likely to be the focus next week.
  

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