by Endovelico » Sun Dec 12, 2010 12:17 pm
The present crisis in Europe shows that the more prosperous countries in Europe are bent on punishing southern countries for their present economic problems, but that they haven't made a single proposal towards solving those problems. Only their budget deficits are targeted, but their main problem is their negative balance of trade. Now the fact is that northern countries benefit greatly from the southern deficits, so they do not want to correct them. Time for southern countries - Portugal, Spain, Italy, Greece, Cyprus - to get together and to start denying their northern partners the benefit of their trade unbalances. Encouraging trade among southern countries - replacing northern suppliers whenever possible - would be one possible way of achieving this, but limiting imports to the value of exports may be a more radical answer to this problem. Eventually creating a different southern monetary union which could devalue in respect of the euro could help balancing trade and showing northern countries that their rigid posture will in the end harm them more than a little bit more solidarity.