Yes the risk of hitting an iceberg is still real

Aquoi will look like the curve of growth in Europe after the crisis For Europeans, always worried of economic collapse, it is a little as if asked to a passenger on the "Titanic" that he would do upon arriving in New York. It is a critical issue at the time where Europe must deal with a constant pressure of the United States and the international monetary fund, among others, which emphasize the need to quickly implement Keynesian stimulus policies. It is true that the situation is bleak at the moment. Revenue in Europe might fall by 4 this year, the unemployment rate to settle around 10 in most countries, at even 20 in Spain and Latvia. The banking system goes wrong, even though Governments have tried to hide the taunts of their banks. But, as bad that is the current situation, the recession will end one day. Yes, the risk of hitting an iceberg is still real. This could begin with a default of the Baltic countries, triggering panic in Austria and in the Nordic countries. But for the moment, a widespread collapse seems less likely than a gradual return to stability. Monitoring return of slow growth accompanied by unprecedented levels of debt and high unemployment.

Here is a good sad table. Some observers have strongly criticized European economists for failing to apply a fiscal and monetary policy as aggressive as that chosen by their American counterparts. For what other reason Europe suffers more than the US recession, lament, while all agree that the United States are at the origin of this global economic collapse These critics believe that Europe will emerge from the crisis in far worse than that of the United States, but it is too early to make such a judgment. A recession of such magnitude from a financial crisis such as we are is a minor event that can be resolved in one year. Therefore, responses from economists therefore cannot be evaluated on measures in the short term. It is also the question of what will happen in the next five years to ask the for the next six months. Few are those who are the real issues. The extremely aggressive response of America will cause a more rapid debt increase while its policy of issuing money means that it will be difficult to implement a strategy to wipe the excess of liquidity. Spending in the US State are passed in a short time from 18 to 28 of GDP and, at the same time, the US Federal Reserve has tripled its cash. The more tempered approach of Europe, while increasing the risks in the short term, may well pay in the long term, especially if interest rates increase, making it much more difficult to bear the weight of too much debt.

The real question is not whether Europe is appeal to Keynesian stimulus plans sufficiently aggressive, but rather to know whether it will succeed in achieving a reform of its economy and to alleviate the crisis. If Europe maintains a more flexible labour market, its financial markets are regulated in a more pan-European way, by remaining open to trade, the growth curve may resume on the rise at the end of the crisis. If countries Europeans adopt a protectionist policy, with a Germany which encourages these people to prefer German cars or a French Government requiring its automotive industry to maintain operation of the plants that are more productive, etc., can indeed expect that paralysis persists even for a dozen years.

Of course, the past year does not offer the ideal circumstances for economic reform in Europe. It has never been easy for European leaders to encourage deep reform in periods of recession. And things are complicated when the Czech Government did not have the vote of confidence halfway through the six months of its Presidency of the European Union, leaving the Commission as a lame duck. The approach of the next elections in Germany, coupled with concerns related to the outcome of the Irish referendum on the Lisbon Treaty (which grant - finally - a new Constitution which Europe has great need), did not real reform.

However, the many strengths of Europe, whose least is not the democratic force of its Government and solid institutions, are often dumped as values of long-term competitiveness in today's globalized economy. The recent recession presents many challenges, but European leaders have had reason to avoid is poisoned with expeditious Keynesian measures, especially where they cannot meet the long-term challenges facing Europe. If Europe is finally undertaking the reforms needed, there is no reason that it is not a growth of per capita income for the next ten years at least as important as that of the United States. In addition, the euro is an incredible opportunity to play a significant role as a currency reserve, given concerns over the sustainability of the US fiscal policy.

We dare not imagine what might happen if Europe fails to come out of this rut. It would probably lose its role, but if necessary, of counterbalance to the United States. It is perhaps not the first of their current concerns (seen more T-shirts Obama in Europe and the United States), but the Europeans would perhaps not so good eye see the advent of a George Bush III. Fortunately, it is expected that the Europeans will soon Act.