The current crisis affects everybody in Europe and beyond! The Euro-Crisis is the beginning of a chain. How it will be managed will determine if we will experience a Europe with closed borders inside and outside, with national currencies, less freedom of movement and nationalist movements. So nobody can “escape” the Euro-Crisis, even if his or her main field of politics is migration, foreign policy or the fight against right-wing extremism, and not economic policies.
Just like every historical crisis or development, the Euro-Crisis has not just the ONE cause. Several wrong decisions were the root for today’s situation.
The German chancellor Angela Merkel is desperately trying to make us think that it’s too high public debt which is responsible for the crisis, and that Greece, Spain, Italy, Portugal and Ireland are now punished for their lack of fiscal discipline. But this is just partly true. ALL debt is responsible for today’s problems; so in addition to the public debt, private debts, by households and companies, needs to be taken into consideration, if the root causes of the crisis are analysed. The total debt as a percentage of the national economic performance rose from 258% in 2000 to 355% in 2010 in Spain, from 251% to 366% for Portugal and from 252% to 310% in Italy. More and more debt by households, firms and the public sector has accumulated, and this is definitely not healthy for an economy.
In addition to the high level of debt, the financial sector is almost directly linked to Europe’s current problems. The banking institutes, especially in Spain and Ireland, gave out loans to buy real estate, and as a consequence, indebted the people. Borrowing money and buying a house is usually not a problem. But in the years from 2000 to 2008, this bubble led to the bankruptcy of many people, as soon as the prices for real estate started to drop. In conclusion, the people who borrowed money from the bank were no longer able to pay back their loans. Since we are talking about billions of Euros, this problem hit the financial sector very deeply. The banks were waiting for loan redemptions which never came. Furthermore, they speculated with these same redemptions. When the real estate market crashed, all the security papers, in which the redemptions were packed, lost their value. A lot of banks went bankrupt, which marked the beginning of the financial crisis of 2008. In Ireland and Spain, the financial sector is responsible for the hardship that many people face. The Spanish banks currently hold 165 Billion Euro of ‘bad’ loans, which will most likely never be paid back. Furthermore, the Spanish banking sector is so big, that it is commonly understood that the Spanish state will do everything to save them with billions of Euros; in order to avoid a dangerous reaction that could trigger a wave of bankruptcies across the world economy. This is the reason why Spain and Ireland have so many problems when they want to borrow money. In this context, it is even more unjustified, that the Spanish people have to come up for the risks and the losses of their financial sector.
Angela Merkel takes the wrong approach to solve the crisis. She thinks that by reducing the public debt, Spain, Portugal, Italy, Ireland and Greece will land on their feet again and our problems will be solved. As a consequence, she ties the help by granting loans, leading to severe cuts in their national budgets. As I already mentioned, this strategy is not only antisocial, in burdening the efforts of this crisis with people who didn’t cause it, but, above all, it is simply the wrong medicine for these countries’ problems. Through her efforts to reduce pensions, cutting wages and shrinking almost all national expenses, Angela Merkel chokes off these economies. Who is willing to open a new enterprise in Spain or Greece these days? How shall the governments acquire money to invest in a green infrastructure, or in renewable energies, if they have to double-check every cent?
What the Eurozone needs is a program to re-establish efficient tax offices, to tackle any kind of corrupted public behavior – especially in Greece, and to give to young people a perspective for their lives. It’s not a surprise that Spain, Portugal, Italy, Ireland and Greece have the highest rate of unemployment among young people in Europe, partly over 50 percent. This situation will not stand. The mentioned fields cost money, but it will be money well spent.
A rather good fact is that the source of the necessary funds can be parallely tackling another cause of the crisis and one of the most serious injustices these days: the uneven allocation of Europe’s wealth. In Germany in 2007, the top 1 percent of the population held funds for an amount of 2600 Billion Euros. This is more money than Germany’s public debt. In Greece, only 2000 families hold 80 percent of the national wealth. The strange thing is that these people don’t have to pay one single Euro more for solving this crisis, as there is no wealth tax there. On the contrary, the mentioned families are able to move their money out of Greece without facing any kind of capital taxes. This is where we have to intervene. We need higher taxes on wealth and capital movement. The German Grüne Jugend takes position for a onetime tax charge targeting the wealthiest persons all over Europe. To skim a small percentage of these people’s money won’t hurt them, but it will be necessary to acquire the means needed to address the most urgent problems in the Euro Crisis: political instability, decreasing solidarity among Europe’s people, lack of perspectives for young people, as well as for the troubled nations themselves to leave this crisis behind. This is where we have to go: to an Europe with a strong social cohesion, which addresses reforms, but does not burden the cost of this crisis with the people who had no part in causing it!