"A number of investors now appear inclined to think the politicians will go to any length to avoid the humiliation of a member state going bust or being bailed out, by the EU or by the IMF.
The result may leave Greece and other debt-plagued countries in the 16-member euro zone in limbo — without the boost of a bailout or the catastrophe of a default, but stuck for years in an uphill struggle to gets its finances straight that will mean lower salaries for many workers, especially those in public jobs, plus higher interest rates and less chance that governments can spend to stimulate their economies.
David Jones, chief market strategist at IG Markets in London, believes that after last week's sharp sell-off in equities, when markets were evaluating the risk of default and the possibility of contagion across the eurozone, investors are now turning to the view that the debt crisis will become a long-term burden — both for Greece and the wider eurozone."
So my question to you is, should the European Union go to the International Monetary Fund to receive bailout money? If not, what alternative action do you believe they should take?
I think the European Union should go to the IMF to receive bailout money. The lower salaries will decrease the amount of money people are willing to spend on luxuries. The higher interest rates could also lead to a housing crisis of sorts as well. I think the governments should swallow their pride and grab the helping hand before falling into an even worse economic downturn. A
ReplyDeleteDecreased salaries and increased taxes will cause people to move. The grass really WILL be greener on the other side. This will, in turn, cause business and poplutation to decrease, plunging the countries into even further financial crisis. The increased, cheaper labor will help other countries to improve their economies. A slow process to fix the economy seems like a downward spiral to me.
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I believe that the EU should go to the IMF as well. I don't really think they have anything to be embarrassed about, especially after looking at us in America and seeing the state of our economy in some places throughout the country. I think they need to recieve this bailout money instead of letting countries such as Greece struggle to keep their heads above water. A
ReplyDeleteThis is very ironic but not unexpected. If my history serves me right, these are the countries: the E.U. and the USA that helped to implement the International Monetary Fund as an international money lending body. Why are they afraid and ashamed to use a scheme that they have created?
ReplyDeleteIs it because the IMF was designed as a way to suppress poorer developing countries? Possibly.
The elites or executive of the E.U. should stop thinking only about themselves, their reputation and prestige and start thinking about the well-being of the citizens too. Don't they deserve a say in the government?
I agree with Cierra, because of this, many people will move because of the decrease in wages and increase of taxes.
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I think that Greece should ask for help, but under the conditions that they clean house. Greece should be willing to deal on this issue because they literally can't create enough revenue to pay off their debt in a reasonable amount of time. They should go to the IMF, and not worry about pride because even the other EU countries are hurting right now, and it is more about survival than pride. Besides, I think it is more embarrassing that they got into this situation rather than asking for help.
ReplyDeleteResponding to Mysha's comment, I think part of the reason for the E.U being embarrassed at the prospect of Greece, an E.U member, requiring an IMF bailout is that the E.U was formed largely to promote the economic well-being of its member states. Greece requiring an IMF bailout would thus represent a tremendous failure of the E.U in this capacity, particularly as E.U membership is supposed to entail considerable financial responsibility. An IMF bailout of Greece, moreover, could easily shake investor and business confidence in other E.U countries, as it would undoubtedly call into question the relative economic stability that E.U membership is supposed to guarantee.
ReplyDeletePeople will be forced to move away from their homes because of the decrease in salary and increase in taxes. These countries will fall into even deeper financial deficits because of the fact that businesses and population will decrease. While these countries will decrease financially, others will increase because of cheaper labor available. This proposed slow fix of the economy doesn't seem very ideal to me.
ReplyDeleteIn my opinion Greece should turn to the IMF, it shouldn’t be about how embarrassing it would be to go to them but it should be how important it would benefit the people of Greece. If economist are predicting that once Greece’s economy fails the rest of the Europe countries are going to fail also; it should be taking into deep consideration. There is nothing to be embarrassed about because they aren’t the only country that are having economical problems. E.A
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