SINK OR SWIM — WILL THE EURO ZONE CRUMBLE?

By Justin DeWaele
Staff Writer

European countries are experiencing yet another wave of recession and public insolvency in what has been dubbed the Euro Zone crisis. This crisis has ballooned public debts, vastly increased unemployment and has forced European citizens to face crippling austerity measures that governments have decided to use in order to shore up the problems. The Euro Zone has existed since 1999 and is made up of the 19 European countries that use the Euro as their currency, and now the very model of integration is being questioned. On Monday, Jan. 30, PROSPECT hosted a panel discussion on the current picture and the future of the Euro Zone featuring Dr. David Fisk of Political Science, Dr. Luis Martín-Cabrera of Literature and Dr. Christina Schneider also of the Political Science faculty. The three panelists provided differing perspectives on the Euro Zone crisis and offered various ways of solving it and the many systemic problems that emerge from a crisis of this nature.

Dr. Fisk discussed the trend in ‘advanced industrial democracies’ of politicians and political parties delegating important matters to ‘non-partisan experts’ to solve while they only make decisions on short-term political affairs. Fisk cited social welfare models and immigration policies as examples of policy areas that have been delegated to non-political entities. Fisk said that this phenomenon has played a major role in European governments’ response to the crisis but that the European public has little stomach for this lack of public accountability any longer. Dr. Schneider laid out three possible solutions to shore up the current situation, which were, essentially, to increase the amount of money that flows into the European economies, deeper fiscal integration and greater external control of markets. Dr. Martín-Cabrera approached the topic in much more broad terms in which he called for a reining in of financial capitalism, regulation of high-frequency trading and the creation of rating agencies based in Europe that are more fair to European interests than the current ones in the U.S., among other things. Cabrera argued that the very nature of the crisis necessitates paying back the financial institutions that gambled with public debt and leaving behind workers and cutting public services such as education and healthcare.

In an interview, Martín-Cabrera talked more about the role of nationalism and national sovereignty in the crisis, the social and economic inequalities that the crisis exploited and some of his hopes for Europe’s future, especially as they relate to Spain, where he focuses much of his research. “The system is like inverted socialism,” he said, “when there are benefits, the benefits are only private — they are for corporations and financial institutions; when there are losses — massive losses — everyone is asked to chip in, take on more taxes, put up with a very regressive labor reform and deconstruct the welfare state in the case of Spain.”

He said that a renewed national sovereignty in Europe could be a viable solution to its economic woes. In Spain, he said, “more and more people have the feeling that important decisions that affect their lives are being taken away from Spain, away from their immediate political environment and going somewhere else in the European Union or in the financial markets.” Mr. Martín-Cabrera thinks that Spain, Greece, Italy and other countries in crisis could temporarily leave the Euro, devaluate their currency and increase exports and create greater demand and more jobs. He questions the idea that integration is more economically, culturally and politically viable at this point, and advocates for a reevaluation of not only the economic system but also the cultural identity that holds together the countries of the Euro Zone.

This latest crisis is an extension of the global financial crisis which started in 2007 and is a case study on the destructiveness and emptiness of the financial system that dominates the global economy, particularly the economies of Europe and the United States. In his presentation, Professor Martín-Cabrera recommended the book, The Violence of Financial Capitalism by Italian economist Christian Marazzi as a book that will illuminate certain aspects of this crisis, and the distorted system that caused it, that we previously did not understand. The mere title of the book seems a step in the right direction. It is time to start viewing the transnational financial institutions that perpetuate this boom and bust, prosperity to crisis, cycle of economics as violent. Their methods are haphazard and unsustainable and it is time for governments to stop covering up for them and convincing the public that cuts and taxes are the only solutions to the problems. The Euro Zone crisis is further evidence that the current model of capitalism has gone sour, and unfortunately sufficient action has not been taken to change the way things are done.

Image courtesy of Flickr user Bland M.

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