Uboat,
Perhaps all 27 nations on a leaking (accumulation of debt) boat should bail out (generation of income) the boat if they want to stay afloat?
The combined GDP of the EU-27 is approximately 16 trillion USD per year while their current combined public debt is estimated at around 10.3 trillion USD. Germany's GDP is ~3.3 trillion USD/year, France's GDP is ~2.7 trillion USD/year, UK's GDP is ~2 trillion USD/year, Italy's GDP is ~1.6 trillion USD/year, Spain's GDP is ~ 1 trillion USD/year, etc.. The EU has previously offered 30 year bonds at 3.75%. Even if the total existing EU-27 debt were to be mutualized there appears to be no way to control future debt accumulation rates nor to balance or offset them with income generation rates for the entire EU-27. There are also a number of significant differences between the responsibilities and obligations of the Eurozone-17 and those of various EU-27 members which serve to further complicate things...
In contrast to the EU-27 both Switzerland and the US levy taxes across all of their cantons (26) and states (50 plus territories), and have mechanisms available to maintain some sort of fiscal and monetary balance for the whole construct. Neither Switzerland nor the US rely upon a single canton (such as Zurich) or single state (such as Texas) to primarily or exclusively fund the remaining cantons or states needs/wants/desires without any (engineering-style) controls. Neither does the international media fixate on Zurich or Texas as descriptor/proxy for the whole. Comparing the EU-27 to Switzerland or the US is probably a step too far given the way things seem to be going...
Nonetheless I am currently wondering about what the possible effects of EU-27 wide/harmonized structural changes such as retirement ages, employment policies, retirement benefits, unemployment benefits, etc. would provide in terms of stabilizing this crisis and how the associated timelines would run when compared to market timelines.
Here are some links that I looked at when thinking about this:
- Eurozone, From Wikipedia, the free encyclopedia, http://en.wikipedia.org/wiki/Eurozone
- European Union, From Wikipedia, the free encyclopedia, http://en.wikipedia.org/wiki/European_Union
- Multi-speed Europe, From Wikipedia, the free encyclopedia, http://en.wikipedia.org/wiki/Multi-speed_Europe
- Greenspan Says Europe Like A ‘Leaking Boat’ With Holes, By Caroline Fairchild - Jun 29, 2012 4:54 PM MT, Bloomberg News, http://www.bloomberg.com/news/2012-0...ith-holes.html
- Some unpleasant eurozone arithmetic, June 22, 2012 11:50 am by Gavyn Davies, FT, www.ft.com
- More questions than answers after the summit, June 29, 2012 4:55 pm by Gavyn Davies, FT, www.ft.com
- Understanding the European Crisis Now, Published: June 14, 2012, NYT, http://www.nytimes.com/interactive/2...html?ref=world
- Polarised prospects, May 10th 2012, 17:21 by The Economist online, http://www.economist.com/blogs/graph...-economy-guide
- Europe government's debts: how much do they owe?, 30.06.12 Updated 06.30, The Guardian, http://m.guardian.co.uk/news/datablo...s&type=article
- EU successfully issued long-term bond with 30y maturity, funding loans of € 3 billion for Ireland and Portugal, Brussels, 9 January 2012, http://europa.eu/rapid/pressReleases...ence=MEMO/12/4
- How to calculate accrued interest, THURSDAY, DECEMBER 21, 2006, http://accruedint.blogspot.com/2006/...erest.html?m=1
- Europe’s Counterproductive Economic Policies Proceeding as Expected, FRIDAY, MARCH 23, 2012, Naked Capitalism, http://www.nakedcapitalism.com/2012/...-expected.html
- ECB May Need To Buttress Bond-Market Respite Leaders Made, By Simon Kennedy and Rebecca Christie - Jun 29, 2012 5:01 PM MT, Bloomberg News, http://www.bloomberg.com/news/2012-0...-buttress.html
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