On Thursday, the European Central Bank launched its 1.1. trillion economic stimulus plan but a top official, Benoit Coeure, warned that unemployment and low growth have threatened the structure of the European Union. Futhermore, Coeure has encouraged governments in the EU to speed up economic reform since the bank itself cannot generate lasting growth. The ECB will reiterate this point when they hold talks with the finance ministers on Monday. Even with record low interest rates, the EU economy has not seen much improvement. In the stimulus plan, the ECB will buy about 60 billion in bonds each month from EU banks until September 2016, in what is called quantitative easing. Lowering the cost of borrowing should hopefully stimulate banks to lend and encourage EU businesses and consumers to spend more. This strategy has been used in the US and Japan and appears to have worked.
http://www.bbc.com/news/business-30966499
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Early polling indications in the Greek general election state that the left-wing, anti-austerity (and by transference, anti-E.C.B./E.U.) party Syriza might gain a near-majority or majority of seats in the Hellenic Parliament and form government. Official indications have them on 145-149/300 seats, with the center-right coalition being heavily hit back in terms of strength. With the possibility of Eurosceptic and anti-austerity parties in control of the Hellenic Parliament, the Greeks may reject austerity conditions and leave (or be removed from) the Eurozone. What implications do you see for confidence and stability in the Eurozone if these electoral trends hold?
Let's be real, the European Union is not in a good place. This lastest round of monetary stimulus is basically admitting that the countries comprising the EU need to regulate their own economic situation, as aggressively or as lightly as needed. That's the opposite point of the Union, which wants to sink up the economic cycle of its subsidiary countries.
One thing that the economically weakest EU members have in common is that they're all young democracies. Greek especially (soak in the irony) is vulnerable because their democracy has been highly influenced and coerced at times since the Cold War. Economic prosperity rarely happens without political harmony. At some point it needs to be realized that some team members just don't want to play nice with the other kids. And how could they play nice when they're still beating them self up? I don't think this means that places like Greece should suddenly be completely shut out. It's in the interest of the rest of the EU to give support, even financially, because the political situation will degenerate the worse the economy gets. Maybe EU membership isn't a good idea anymore, but they still need the cheap money coming in.
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