. Earth Science News .




.
POLITICAL ECONOMY
Outside View: Saving Europe from collapse
by Peter Morici
College Park, Md. (UPI) Apr 26, 2012

Spain tightens border in run-up to summit
Barcelona, Spain (UPI) Apr 26, 2012 - Spain said it is tightening its borders in anticipation of violent anti-austerity protests at the upcoming European Central Bank summit in Barcelona.

The Madrid government announced Tuesday it will suspend the EU's Schengen Agreement visa-free protocol beginning Saturday and require border checks for anyone entering the country.

The measures will be in effect through May 4, one day after the ECB summit, which is coming amid a popular backlash against deep austerity measures proposed by Spanish Prime Minister Mariano Rajoy and his conservative government.

The Schengen Protocol, established in 1985, allows for the free travel between the 25 EU members states that have signed the agreement. But it also contains a provision to suspend the rules for up to 30 days in cases of a "serious threat to public order or internal security."

That clause was invoked by Catalonia's minister for home affairs, Felip Puig, who cited police reports indicating the possibility of foreign nationals going to Barcelona to provoke violent protests, the Catalan News Agency reported.

Puig asserted in the security request that local police are seeking to keep out "anti-system violent" foreigners who want to enter the country -- a request he said is supported by police reports evaluating the risks to Spain.

Also, some 6,500 officers are to be deployed in Barcelona ahead of the summit. Officials said about 4,500 Catalan police officers and 2,000 members of the national police force will collaborate with the effort.

Rajoy said land borders with France were to be reinforced at La Jonquera, Port Bou, Puigcerda, Camprodon, Les and Canfranc, with additional forces deployed at the Girona and Barcelona airports.

Police say the ECB summit will likely be targeted by a wide spectrum of foreign and domestic protesters who oppose the tough austerity measures sought by debt-laden European governments, which are under pressure by lenders to shore up their finances.

In Spain, hundreds of thousands of protesters took to the streets last month, joining general strikers in denouncing changes to work rules that weakened collective bargaining rights.

Several violent clashes were reported in Barcelona.

The conservative government, elected in November, Tuesday unveiled its new budget, which seeks to slash spending by $36 billion and reduce the deficit from 8.5 percent to 5.3 percent of gross domestic product in a single year.

It was presented as the country officially tipped into a recession and the government insisted tough measures must be taken to assure international creditors, Euronews reported.

"The situation is difficult, very complicated and the government is aware of that, so that is why we are taking those decisions to overcome this grave situation," Rajoy said.

Under his new budget, pensioners will have to start paying 10 percent of once-free prescription drugs, while working people who once paid 40 percent will now have to cover 60 percent of their drug costs.

Students will also face higher university fees while teachers will be made to work longer hours with larger class sizes under the budget.

Spain has mostly avoided the large-scale protests seen this year in Greece, where harsh austerity moves triggered weeks of violent unrest. Analysts note, however, that unemployment is predicted to reach 24 percent with few economic stimulus measures likely coming, Euronews said.


Governments may soon fall in France and Holland and are quickly losing legitimacy elsewhere in Europe because austerity programs and a common currency risk throwing the continent into an endless recession.

Europe's infamous labor laws, which make layoffs expensive and businesses reluctant to invest, have long impeded investment and productivity growth.

During the expansion of the 2000s, the competitive core -- Germany, other northern economies and important parts of France -- coped better and accomplished stronger productivity. Consequently, the euro became undervalued for those economies and overvalued for Mediterranean economies -- specifically, goods made in the north became bargain-priced and those made in Club Med states too expensive.

Southern economies suffered large trade deficits with the north and insufficient demand for what they make. Governments in Italy, Greece and Portugal borrowed feverishly to keep folks employed, finance early retirements and provide inexpensive healthcare.

Even as northern Europe and the United States recovered, the sovereign debt carried by those governments alarmed investors and interest rates soared. Each was forced to accept bailouts from more solvent European governments, led by Germany, on the condition they accept draconian austerity and pledge allegiance to the common currency.

Certainly, Mediterranean states must trim government spending and reform labor markets but to pay back what they owe they must earn euros by growing their economies and exporting more than they import. Together, those require more gradual reductions in government spending and abandoning the euro or their economies will endure years of high unemployment to push down wages and prices and make their economies competitive with the north.

In the end, all this will not be enough and endless recession will result, as new investments dry up and existing capital -- both machines and workers' skills -- atrophy or leave. The collapse of the south is threatening the vitality of the north, as Germany, Holland and others may fall into recession without customers further south for what they make.

Excessive government spending didn't undo all the troubled economies of Europe. Spain, the next government likely to need a bailout, ran persistent budget surpluses until the financial crisis. However, it enjoyed real estate and property booms, as wealthier northern Europeans sought vacations and second homes in its sunny climate.

Ireland and Iceland, the first European countries to collapse, were undermined by banks that helped finance Europe's wider real estate bubble by selling bonds and taking deposits from foreigners.

When the financial crisis came in 2008, central banks in Spain, Iceland and Ireland could not print money in the manner of the U.S. Federal Reserve to shore up bank balance sheets. Instead, their governments were forced to sell bonds to raise euro to bail out banks and borrowing requirements were too large relative to the size of their economies. Investors fled and their national finances collapsed.

The 2011 Fiscal Stability Pact, which requires all EU governments to push down deficits to 3 percent of gross domestic product before the continent as a whole has recovered from the Great Recession, makes the problems of accomplishing recovery in Italy, Greece, Ireland and other troubled economies impossible -- they have fewer customers for their exports, high unemployment and hence, can't earn the euro and grow their tax bases to pay off their debts.

Exacerbating matters, the big European banks are burdened with huge amounts of private debt that will never be repaid. Since December, the European Central Bank has been aggressively lending to them but with bank regulation remaining the province of national governments, it lacks the clout to force reforms the Federal Reserve enjoys when doling out aid.

Hence, the European banks, rather than raising enough new capital and writing off failing loans, are employing questionable bookkeeping -- reminiscent of practices employed by U.S. banks before their collapse -- and are using ECB funds to paper over dodgy loans.

To get Europe back on its feet, the Germans and broader European Union must first dial back a bit on deficit reduction while continuing labor market reforms.

However, they will never get out of their long-term quagmire without abandoning the euro in favor of national currencies. This would permit exchange rate adjustments that would better align prices in weaker economies with those in Europe's strong core and permit exports and debt repayment by troubled economies.

Also, the central banks of individual European countries, armed with their own currencies, would be able to tie aid to banks with genuine reforms -- increasing capital and restoring credible lending practices.

(Peter Morici is a professor at the Smith School of Business, University of Maryland, and a widely published columnist.)

(United Press International's "Outside View" commentaries are written by outside contributors who specialize in a variety of important issues. The views expressed do not necessarily reflect those of United Press International. In the interests of creating an open forum, original submissions are invited.)

Related Links
The Economy




.
.
Get Our Free Newsletters Via Email
...
Buy Advertising Editorial Enquiries




China commits $10.5 bn for business in ex-communist Europe
Warsaw (AFP) April 26, 2012 - Chinese Premier Wen Jiabao on Thursday unveiled a total of $10.5 billion dollars in credit lines and funds aimed at boosting business with the blossoming economies of central and eastern Europe.

On his first visit to Poland in a quarter century, Premier Wen announced a $10 billion (7.57 billion euros) special credit line to support joint projects in the ex-communist region.

The Chinese leader, who is winding up a four-nation European tour after earlier stops in Iceland, Germany and Sweden, also announced plans for a $500 million start-up fund backing Chinese business ventures in central and eastern Europe.

The new strategy suggests a major departure from the modest $821 million China sank into the region between 2004-10, according to recent data by the Central & Eastern Europe Development Institute (CEED).

Analysts insist the cash-rich Chinese are keen to capitalise on the region's stability, growth and competitive prices to gain "perfect access to the West European market" -- still Beijing's top export destination.

"Its very good news for the region given that Chinese political statements are more than likely to be backed with action and resources from Chinese firms," Warsaw-based analyst Witold Orlowski told AFP.

Orlowski, who works for consultancy PricewaterhouseCoopers, said that a "significant economic boost" could be in store.

Premier Wen himself said China and Central and East European countries have entered "a promising spring season with important opportunities to rapidly grow our friendly relations".

"As we work hard to cultivate the seeds we have sowed, we will certainly reap a bumper harvest," he said.

Wen announced the major cash injection alongside host Polish Prime Minister Donald Tusk at a major trade forum for three hundred Chinese firms and 450 companies from across the region.

The Chinese leader also said Beijing wanted to see significant expansion in bilateral trade with central and eastern Europe over the next three years.

Pointing out China's two-way trade with central and eastern Europe "rose from only $4.3 billion in 2001 to $52.9 billion in 2011, growing at an average annual rate of 27.6 percent," Wen said Beijing now wanted to see bilateral trade reach $100 billion by 2015.

Wen later met with 15 senior leaders from the across the region for multi-lateral talks focused on developing China's political ties.

Leaders from Albania, Bulgaria, Bosnia and Herzegovina, Croatia, the Czech Republic, Estonia, Hungary, Latvia, Lithuania, Macedonia, Montenegro, Romania, Serbia, Slovakia, Slovenia and host Poland were present.

Two dozen free-Tibet protesters and supporters of China's outlawed Falun Gong group meanwhile rallied Thursday both in front of the trade forum held at a central Warsaw hotel and outside the city's royal palace.

Wen on Wednesday said human rights and the rule of law were on Beijing's radar.

China was "striving not only for economic development, but also for the construction of the rule of law and human rights," the premier said.



.

. Comment on this article via your Facebook, Yahoo, AOL, Hotmail login.

Share this article via these popular social media networks
del.icio.usdel.icio.us DiggDigg RedditReddit GoogleGoogle



POLITICAL ECONOMY
China unveils $10 bn credit line for central, east Europe
Warsaw (AFP) April 26, 2012
Chinese Premier Wen Jiabao announced Thursday a $10 billion special credit line for central and eastern Europe to support cooperation projects mainly in the ex-communist region's infrastructure sector. "To boost practical cooperation with central and east European countries, the Chinese government has decided to set up a $10 billion special credit line," Wen told thousands of delegates at a ... read more


POLITICAL ECONOMY
Construction of Chernobyl shelter starts on anniversary

Sean Penn urges more aid for Haiti

Hong Kong holds nuclear accident drill

European body sees broad failures in Libya migrant deaths

POLITICAL ECONOMY
Google sells 3D modeling application SketchUp

The ultimate babysitter? iPads for infants stir debate

TED blends animation with education at new website

360-Degree MEADS Radar Begins Integration Testing

POLITICAL ECONOMY
Xayaburi Dam construction to continue?

Research is ensuring stormwater systems are designed for the future

Planned dams in Amazon may have largely negative ecosystem impact

Bangladesh faces water problems

POLITICAL ECONOMY
Study Finds Surprising Arctic Methane Emission Source

State of Himalayan glaciers less alarming than feared

Breaking the Ice on Icebergs

Arctic marine mammals and fish populations on the rise

POLITICAL ECONOMY
Hong Kong suspends poultry imports from China province

New South Asia network to tackle 'massive' climate adaptation challenge

Potato consumption lower than expected

World's first handmade cloned transgenic sheep born in China

POLITICAL ECONOMY
GPS could speed up tsunami alert systems: researchers

NASA's New Satellite Movie of One Week's Ash Activity from Mexico's Popocatepetl Volcano

Warning signs from ancient Greek tsunami

Hundreds evacuated as Russian village flooded

POLITICAL ECONOMY
Sierra Leone's gruesome 10-year civil war

Stench of death in Heglig, where Sudan says 1,200 died

Mali junta yet to return to barracks: groups

G.Bissau will 'defend itself' if foreign troops sent: junta

POLITICAL ECONOMY
Rio Summit must address population growth: scientists

Scientists show how social interaction and teamwork lead to human intelligence

NIST mini-sensor measures magnetic activity in human brain

Meat eating led to earlier weaning, helped humans spread across globe


Memory Foam Mattress Review

Newsletters :: SpaceDaily Express :: SpaceWar Express :: TerraDaily Express :: Energy Daily
XML Feeds :: Space News :: Earth News :: War News :: Solar Energy News

.

The content herein, unless otherwise known to be public domain, are Copyright 1995-2012 - Space Media Network. AFP, UPI and IANS news wire stories are copyright Agence France-Presse, United Press International and Indo-Asia News Service. ESA Portal Reports are copyright European Space Agency. All NASA sourced material is public domain. Additional copyrights may apply in whole or part to other bona fide parties. Advertising does not imply endorsement,agreement or approval of any opinions, statements or information provided by Space Media Network on any Web page published or hosted by Space Media Network. Privacy Statement