April 13, 2015
WASHINGTON - The countries of southern Europe need a good comeback story. Young people in Southern Europe are leaving at alarming rates for more competitive northern European countries, and even emerging markets in Latin America. Rising political dissonance in Greece, France, and Italy has increased concern in Brussels about political and economic uncertainty, and even possibly a eurozone break-up beginning with Greece. Escalating concerns that the euro crisis will worsen have investors in a sort of holding pattern, and unemployment remains unsustainably high.
Long-term recovery solutions have not traditionally come from Brussels or Frankfurt. Quick fixes such as quantitative easing may create temporary boosts in demand, but do little to address longer term shortcomings. Long-term employment protection schemes introduced in Spain, France, and other southern European countries may create a better safety net, but will do little to address the underlying investment and growth problems plaguing both old and new firms.
Yet European banks are flush with cash for the first time since 2009. The European Central Bank's stress test last October reflected only a €10 billion shortfall, which was plugged soon after it was reported. This was an overwhelmingly positive result for European banks, especially southern European giants like Banco Santander in Spain, UniCredit Group in Italy, and BNP Paribas in France. At the same time, political and economic uncertainty keeps investors wary, thus perpetuating the investment holding pattern and leaving unemployment in the region high.
No comments:
Post a Comment