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Saturday, June 26, 2010

WE KNOW,WE HAVE EXPERIMENTED,WHY DON'T WE PROCEED ,FASTER???

ON THE OCCASION OF OUR EPAPHOS TEAMWORK PARTICIPATION IN THE CLEAN SKIES CONFERENCE ,AT BRUSSELS,ON 18/06/10,WE POST THIS INTRIGUED ARTICLE,WHICH CASE SEEMS THAT YET ,ISN'T STUDIED WELL BY THE EUROPEAN AERONAUTICS INDUSTRY.
A COMBINATION WITH OTHER ENERGY RESOURCES ,CURRENTLY, COULD PROVIDE A FURTHER DIMINISHING OF THE FOSSIL FUELS CONSUMPTION.
WE WOULD LIKE INFORMING THE PUBLIC ABOUT THE TODAY'S ACHIEVEMENTS OF EUROPEAN AERONAUTICS INDUSTRY,BY THE DIMINISHING OF ENERGY CONSUMPTION,AT LEAST UP TO 30%.
BUT ON THE OTHER HAND WE ARE EXPECTING AN INCREASE BY THE MAN-MADE EMISSIONS OF CO2,FROM THE PARTICIPATION OF THE AVIATION INDUSTRY,FROM TODAY 2% OF THE TOTAL, TO 3% UP TO 2050.
AT THE CONFERENCE WERE PRESENTED A LOT OF NEW TECHNOLOGIES,BUT THE MAIN ONE WAS THE
OPEN-ROTOR ENGINE TYPE,AT THE BACK OF THE PLANE,READY FOR IMPLEMENTATION.

PS.CLICKING ON THE TITLE YOU WILL BE REDIRECTED TO A PHOTO SHOW,OF THE EVENT





'We Have the Technology to End Our Dependence on Fossil Fuels'


Bertrand Piccard has been working on a solar-powered plane for almost a decade and hopes to fly it around the world in 2013. He spoke to SPIEGEL ONLINE about ending the world's addiction to fossil fuels, the aviation industry's need to change and how he plans to stay awake during the round-the-world flight.

SPIEGEL ONLINE: You have been working on a solar-powered airplane for almost 10 years. But not a single tourist or business traveler will ever fly in your plane. What's the point of the project?

Bertrand Piccard: To be frank, the airplane is not the most important thing to me. It is a means to an end. The message is the important thing -- that's what I've been working on for over the last 10 years. It is only because of this project that people listen to me when I speak about the things that matter to me. I want to make clear that we have the technology today to end our dependence on fossil fuels.


SPIEGEL ONLINE: Which is why your plane relies on solar power.

Piccard: Yes, and we did not have to develop new solar cells or batteries. Basically, we utilize technologies that you can use in your house, your car or wherever. Of course it is difficult to build a solar-powered plane that flies day and night. You have to optimize some things.

SPIEGEL ONLINE: But there will be no technological spin-offs from the project?

Piccard: Everything is already there. Spin-offs are not important to me. I want to make sure that the people out there follow our adventure and understand that they can save energy and that they can use alternative power sources -- just like we do.

SPIEGEL ONLINE: To spread this message, you have become something of an itinerant preacher around the globe.

Piccard: I can reach millions of people a year through interviews and presentations. I would also like to exert an influence on political decisions. For example, I would love to speak to the delegates of the next United Nations climate conference in Mexico.

SPIEGEL ONLINE: What would you tell them if you got the opportunity?

Piccard: That the current debate is missing the point. We should not speak only about the costs of adapting to climate change. Our problem is not climate change but our dependence on fossil fuels. If you reframe it like this, you understand that there are lots of solutions to the problem. And these opportunities are profitable. It is not a question of costs anymore, but of profits.

SPIEGEL ONLINE: After the failure of the Copenhagen climate summit, it seems that a lot of the momentum for saving the climate has dissipated -- even if you present it as a job-creation machine.

Piccard: Nobody these days would find it acceptable to simply empty their trash can in the forest. But at the same time you are allowed to emit as much CO2 into the atmosphere as you want. Is this normal? Countries have to agree on ambitious rules to protect the climate. We need strict limits on energy consumption and CO2 emissions. But we should not tell industry how to reach these goals. They will find the best methods.


SPIEGEL ONLINE: A lot of managers don't share your desire for strict rules on energy consumption and climate protection.

Piccard: There are stupid people everywhere, that's for sure. If General Motors, for example, had been obliged to produce more fuel-efficient cars 10 years ago, they would not have gone bankrupt. It's not a question of regulating companies out of business, but of making them able to survive.

SPIEGEL ONLINE: The airline industry has a particularly big problem when it comes to the environment. Do industry leaders understand that their survival is at stake?

Piccard: They understand the magnitude of the problem. But they have no idea what to do about it. When oil prices go up, they will be in big trouble. You need to reduce the weight of planes; you need to have more direct routes; you need to make continuous descent approaches, which reduce fuel consumption. Everybody has known this for years. But not much has happened.

SPIEGEL ONLINE: Your plane Solar Impulse will fly only 70 kilometers per hour (43 miles per hour) on average. Could slower flying speeds also save fuel for commercial airliners?

Piccard: In principle, yes. It is something of a paradox. Everybody wants to fly as fast as possible. But should oil prices rise above $200 (€166) per barrel, you will eventually have to reduce speed.

SPIEGEL ONLINE: Had you used fuel cells for your plane, you would surely have aided the airline industry more than you have. In that scenario, passengers might have been able to fly with the technology one day -- in contrast to the solar plane that you have built.

Piccard: I did think about fuel cells in the beginning. But solar cells are more consistent with our goals. We want to change people's behavior. We don't want to change the airline industry.

SPIEGEL ONLINE: Solar Impulse has made five test flights so far. Why have you not flown a single one of them?

Piccard: Our German test pilot Markus Scherdel is much better trained for the job. He is both a pilot and an engineer; as such, he helps to make the plane better. Flying stability has improved a lot. My associate André Borschberg has already taken his first flight. And in the next two or three weeks, I plan to enter the cockpit myself.

SPIEGEL ONLINE: Are you planning on making the first night flight, when your plane will have to use energy stored up during daylight hours?

Piccard: Either André Borschberg or myself will do it. We will decide at the last minute. We plan to start sometime around June 21. And if it doesn't work the first time, we will just have to keep trying. We can't fly around the world if the plane does not stay in the air at night. It's as simple as that.

SPIEGEL ONLINE: If everything goes well, you plan to fly around the world in 2013. Why are you planning on making five stops on the way?

Piccard: There is only room for one pilot. You are totally on your own in the cockpit. And nobody can stay awake for 20 days in a row. After five days of travelling alone, things get a bit dangerous. That's when we want to change pilots.

SPIEGEL ONLINE: How do you plan to keep alert during the flight?
Piccard: I will use meditation and self-hypnosis. And apart from that, there will be an autopilot that permits sleeping, at least for short periods of time.

SPIEGEL ONLINE: There will not even be room for a toilet in the small cabin. How will you solve that problem?

Piccard: With plastic bags.

Interview conducted by Christoph Seidler.

Bertrand Piccard, 52, is a Swiss psychiatrist and aeronaut. He wrote aviation history in 1999 when, together with the Briton Brian Jones, he circumnavigated the Earth in a balloon, taking 19 days, 21 hours and 47 minutes for the voyage. Piccard comes from an adventurous family. His grandfather, Auguste Piccard, was the first person to ascend to the stratosphere in a balloon, while his father Jacques Piccard was a famous deep-sea explorer who reached the deepest point of the world's oceans, the Mariana Trench, in 1960.



source DERSPIEGEL

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Sunday, June 20, 2010

IMF MUST BE AWAY OF EUROPEAN AFFAIRS,THIS WILL ENSTRENGHTEN US

OUR ESTIMATIONS SEEMS THAT ARE  ALMOST   JUST.
SO APART FROM THE HONORABLE PRESIDENT OF EU,TODAY THE PRESIDENT OF THE EUROPEAN CENTRAL BANK MR.TRICHET,BLAMED THE BANK SECTOR FOR ITS BEHAVIOR AND ARROGANCE,SPEAKING ALSO ABOUT OUR DEMOCRATIC (REPRESENTATIVE) REGIMES,WHICH ACCORDING TO OUR OPINION ARE TOO OLD,IN IDEAS AND POWER FOR REFORMING EU.
ON THE OTHER HAND CHINA ,IS BEING PRESSED TO KEEP THE BALANCES ON THE GLOBAL WAY OF THINKING,DECLARED A YUAN UNDERVALUATION,THROUGH THE TIME AND IN LOW RHYTHMS.
THE CHINESE DON'T SEEM TO BELIEVE WHAT THEY ARE  TALKING ABOUT.
THANK YOU
AGGELOS

PS CLICKING ON THE LINK YOU ARE REDIRECTED TO AN OLDER ARTICLE ABOUT MR.TRICHET'S  DECLARATIONS.



Strong euro hid crisis, says EU chief

Herman Van Rompuy, president of the European Union, has blamed the strength of the euro in recent years for blinding the eurozone to its underlying fiscal problems.

He also criticised financial markets for overreacting to those economic difficulties and being too heavily influenced by “rumours and prejudices”.
He said: “The markets were too indulgent in the first decade, but now they overreact a lot of the time to small incidents.


“What went wrong wasn’t what happened this year. What went wrong was what happened in the first 11 years of the euro’s history. In some ways we were victims of our success.

“The euro became a strong currency with very small interest rate spreads [on government bonds]. It was like some kind of sleeping pill, some kind of drug. We weren’t aware of the underlying problems.”

In an interview with the Financial Times, Mr Van Rompuy said that the 16-nation bloc had been on the edge of a breakdown last month that could have caused a world crisis. But European leaders now understood that the way forward was to implement politically unpopular but necessary economic reforms, such as opening up labour markets and raising the retirement age, he said.

He is to chair a summit of EU heads of state and government in Brussels on Thursday that will approve a 10-year programme for economic reform.

He acknowledged that the markets had played a useful role since the Greek debt crisis erupted last October in identifying weaknesses in eurozone economic governance.

But he fully supported tougher financial market regulation, especially for credit rating agencies and derivatives markets – measures EU authorities are drawing up.

“Most of us are not happy with excessive market developments. But when you look at this in a broader perspective, the markets are sanctioning bad policies, sometimes excessively, disproportionately and based on rumours and prejudices.”

Asked if he thought markets acted like “packs of wolves” – a term used last month by Anders Borg, Sweden’s finance minister – he replied: “It is not in my character to use such words.”

Mr Van Rompuy said financial markets had contributed to the eurozone’s crisis by being too soft on fiscally irresponsible governments in the years after the euro’s creation in 1999.

He criticised the French and German governments of the early part of the decade for relaxing the stability and growth pact – the EU’s fiscal rulebook – in 2005. “This sent the wrong signal,” he said.

Mr Van Rompuy, 62, said Europe’s biggest challenge was to introduce reforms required to double the EU’s economic growth rate and safeguard its unique blend of vigorous capitalism and a generous welfare state. “The toughest thing now is reforms in the budgetary field and the economy – competitiveness, labour market reforms, the retirement age,” he said.

“Of course, it will be difficult. At certain times there will be social unrest and political opposition to all this. But I know most of the leaders now. They are preparing to take huge risks because they know what is at stake for the eurozone.”

By Tony Barber in Brussels

Published: June 13 2010 22:05
source FT

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Friday, June 11, 2010

Our Leaders Are Responsible for Europe's Crisis

THIS IMPORTANT  DER SPIEGEL'S ARTICLE  SPEAKS ABOUT THE TRUTH,WHICH WE ALL KNOW.
BUT  IT DOESN'T OFFER SOLUTIONS.
EUR-OZONE AND EU ARE VERY DANGEROUS FOR THE STRATEGICAL DEPLOYMENT  OF THE GLOBALISTS PROJECTS,IF WE  BECOME REALLY POWERFUL AND STOP ACTING AS  SECOND CLASS POWERS.
THE EUROPEAN OFFICIALS WHO  ACTUALLY  ARE THE PEOPLE WHO  MOVE  THE THINGS IN ORDER THESE  TO BE DONE ,ARE VERY CONCERNED ABOUT OUR COMMON AND ONE WAY FUTURE.
THAT'S A  FACT.
WE HAVE  IMITATED THE USA WAY FOR  DEFENDING  OUR ECONOMIES BUT ACTUALLY WE ARE REFINANCING THE BANK SECTOR  AND THE SO CALLED  "MARKETS " ,WITH 750 BILLION EUROS,WHICH  IS ABOUT THE 1/3 OF THE TOTAL AMOUNT WHICH UNITED STATES CITIZENS HAVE DONATED (SEE LENT) TO THEIR BANK SYSTEM.
FROM ONE POINT OF VIEW THAT AMOUNT IS GIVEN TO THE GLOBALIST POWERS ,IN ORDER TO LEAVE US CALM FOR A LITTLE WHILE,AS THE RESULTS IN USA AFTER ALMOST 2 YEARS CANNOT BE SEEN.
ON THE CONTRARY THEY NEED MORE (AS THE FEDERAL RESERVE SAYS IN ITS  SCIENTIFIC -POLITICAL WAYS).
ANOTHER TOOL (SIC) OF THE GLOBALISTS  THE  IMF ASKS FOR NEW FINANCE FROM THE INTERNATIONAL COMMUNITY  (SEE CITIZENS) , OTHER STAKEHOLDERS  (WHO ARE THEY,AS PERSONS???) .AT SAME TIME  IMF  BEGAN INTERFERING TO OUR EUROPEAN AFFAIRS.SO IT  ASKS FROM THE CITIZENS TO BE FINANCED  FROM THEM ,IN ORDER TO IMPLEMENT  MEASURES FOR CUTTING THEIR COST OF LIVING (SEE TAKES MONEY AGAIN,THROUGH  MINIMIZING OF DEBTS.Who are these persons to whom people,central banks,states,owe those huge amounts of paper  money?).
WHY SHOULD  WE  STAND  THAT?
WE ARE THE POWER,WE FEED THE WORLD BY OUR CITIZENS CONSUMPTION ABILITY (SEE STATISTICS FOR  GLOBAL IMPORTS-EXPORTS).WE HAVE THE ECONOMIC POWER,ESPECIALLY AFTER  UNDERVALUATION OF EURO,TO GET THE THINGS DONE BY OUR PEACEFUL ,DEMOCRATIC AND CULTURED WAYS.
THE  EUROPEAN CITIZENS ARE MATURED LIKE ATHENIANS WERE ,BEFORE THE GOLDEN ERA.
IMF MUST BE OUT ,LET THEM GIVE US THEIR OPINION,BUT PUT THEM OUT,THEY CAN FIND OTHER WELL  FITTED  CLIENTS .
THANK YOU
AGGELOS

PS. IF YOU CLICK ON  THE TITLE A FT ARTICLE ABOUT G20 EXPLAINS SOME IDEAS



It was neither tax evaders in Greece nor hedge funds that caused Europe's existential crisis -- political leaders in the euro zone share a great deal of the responsibility. They have been either unwilling or incapable of doing their jobs.

When the financial institutions of the Western capitalist world began to wobble in the autumn of 2008 -- with some collapsing and taking others with them -- fear swept through the corridors of power. What could be done to stop an economic meltdown? Finance ministers and world leaders gathered at hectically planned crisis summits, where they applied Band-Aids to a severely wounded financial sector using billions of dollars and euros of taxpayers' money and promised to stabilize the fragile system for all eternity.

More than a year has passed since then, but not much of substance has been done.


When the first states found themselves on the brink of bankruptcy -- Latvia, Estonia, Hungary and then Greece -- the leaders donated more and more billions of taxpayers' money and prescribed drastic remedies in the form of stringent austerity measures -- including for themselves. "We did what was necessary," a confident German Chancellor Angela Merkel said at each stage of the crisis. Her colleagues nodded in satisfaction.

At the same time, most of them don't even have a clue as to whether their activities have been helpful or counterproductive, or if they are even having any effect at all. "It worries me that many politicians believe that things will be the same after the crisis as they were before the crisis, when the world was still in order," Carsten Pillath, the director general in the European Council responsible for finance policy, told a small group of co-workers.

But Pillath, like many other economists, believes that is a big mistake. "In the longer term, we will have slow growth rates, while having to clean up over-indebted budgets at the same time," he said. If Europe is to succeed in doing that, however, it needs a "macroeconomic model" -- in other words, a target which can provide the basis for economic policy decisions.

The fact is, however, that politicians aren't even thinking about this. The men and women elected to higher office are mainly interested in one thing: getting re-elected and retaining their power. Anything else is secondary.

Provincial Bafoonery and Political Denial

If you look at the European political landscape these days, the image you get is largely a desolate one.

The political parties in Belgium, Luxembourg and the Netherlands, core countries of the original European project, are locked in endless battles, government crises and provincial buffoonery.
In Eastern Europe -- Hungary and Slovakia, for example -- nationalist parties are stoking the fires of anger in their own countries.
In Greece, the current government is struggling to deal with a legacy it has inherited from its predecessors. For decades, three families have taken turns to govern the country, with only a few short breaks here and there. The Papandreou clan of the current prime minister is one of them. The corrupt dealings of his grandfather, who once led the country, are the stuff of legend. And the people of Greece, whether passively or actively, adapted to the system.
The situation is no different in Italy: The country, one of the founding members of the European Union, has been in a state of political denial for years. The people of Italy doze in front of the television programs of media czar and Prime Minister Silvio Berlusconi, who himself has made a fulltime job of protecting his supporters in parliament with more and more new laws that will save them from prosecution. Meanwhile, opposition politicians are devouring each other over trivialities.

A Hyperactive Sarkozy and a Hesitant Merkel

For a long time, the German-French double act ensured at least a minimal amount of leadership and orientation in Europe. But those days are over, too. Take, for example, the following questions: Do we need European economic governance? Should we ban hedge funds? How massive should the austerity measures being put in place be? Does Europe's economy need stimulating? The governments of Germany and France are currently providing contradictory answers to most of these questions -- or worse, no answers at all.

Almost worse is the fact that the countries' leaders aren't only far apart when it comes to goals. They also differ radically in their style of doing things: Nicolas Sarkozy is a hyperactive egomaniac, while Angela Merkel is a grouchy ditherer.


It makes no sense to try to "hide the fact that there is tension between France and Germany," Jean Bizet, the chairman of the European Affairs Committee in the French Senate, wrote in a recent essay for Le Monde -- and it is unlikely he put pen to paper in such a controversial way without discussing it first with Sarkozy, a close political ally.

Berlin regularly riles back, mostly under the cover of aides to the chancellor who can not be quoted. After reaching a €750 billion deal to shore up the faltering euro in early May, Sarkozy boasted to reporters that he had succeeded in pushing through "95 percent" of his ideas, including a "European economic government." A confidant of Merkel sneered back: "I will not deny that that was hot air."

Part 2: The Results of Political Failure


Europe's crisis is not an accident caused by the globalized economy -- it is the result of political failure.

Who was responsible for liberalizing the financial markets, and celebrating that fact, until practically no controls were still possible? Wasn't that the politicians -- the conservatives here, the leftists there and the market liberals everywhere?
And was it not the politicians who accepted the fact that the economies within the euro zone were drifting apart -- all the while telling the people that that wasn't a bad thing?
And who was it that racked up the gigantic mountains of debt, because it was so convenient and because it saved them from having to make demands of the electorate? Was it not those same politicians who are today calling this debt the root of all evil and who are heroically trying to clear them away?
And is the return to national interests and the turning away from European solidarity, just to keep nationalist- and populist-minded voters happy, really the way to solve Europe's problems?


This ailing continent needs newer and better politicians. But where could we find them? There is no sign of a European Obama or anything remotely like him.

'A Leadership Vacuum in Its Hour of Crisis'

People are being fooled by "renationalization tendencies" and politics that are increasingly provincial, argues Manfred Weber, a member of the conservative Christian Social Union -- the Bavarian sister party to Merkel's CDU -- who is the deputy head of the European People's Party group in the European Parliament. "People think they can solve the problems best on their own, in their own country." But Weber argues that way of thinking is incorrect: "It just reinforces prejudices." His conclusion? "There aren't enough true Europeans involved in politics."

Europe is "suffering from a leadership vacuum in its hour of crisis," claims Markus Ferber, the head of the Christian Social Union group in the European Parliament. That is especially apparent in Brussels, the European Union's control center. It's the place where, ideally, proposals for dealing with the crisis would come quickly and decisively, would be packaged to meet the interests of the 27 member states, and compromises would be prepared in advance that would make it possible for all countries to swiftly make decisions together. But at the time of the most threatening crisis since the bloc was founded, the people at the helm in Brussels are pale, weak figures.

A Complete Failure in Brussels

The European Commission, which likes to proudly present itself as keeper of the Holy Grail, in the form of the European treaties, and which sees itself as the core of the political project of the century, has been completely out of commission when it comes to crisis management. First, it remained silent in order not to endanger the re-election of its president, Jose Manuel Barroso. And once he was confirmed in office after a protracted stalemate, he had suffered so many indignities that leaders in the important European capitals no longer took him seriously.

In addition, the ratification of the Lisbon Treaty, the successor document to the failed European constitution, put the European Parliament -- previously a talking shop without much power -- onto a largely equal footing with the Commission. The parliament and the European Council, which comprises the heads of state or government of the 27 EU members, have suddenly become the poles of power in Brussels, says Professor Jörg Monar of the College of Europe, a university known for grooming future eurocrats. The European Commission, he says, "is getting increasingly crushed" between the two.

Breakfast on Mondays

Former Belgian Prime Minister Herman Van Rompuy so far hasn't done anything to change the state of malaise in Brussels. He was chosen as the first permanent president of the European Council and was supposed to lend more European solidarity to the summits of national EU leaders. That effort went pretty much awry. "Van Rompuy was travelling in Asia as the crisis summit was being held in Brussels," scoffed the CSU's Ferber, adding that European Commission President Barroso was "busy with the EU-Latin American summit."

Now the impotent want to regroup. Van Rompuy has announced the creation of "some crisis cabinet" that would quickly bring together "the main players and the main institutions." It would include Jean-Claude Trichet, the president of the European Central Bank, European Commission President Barroso and, naturally, Van Rompuy himself. "That's hilarious," one government adviser in Berlin said in response to the proposal. And inside the Elysee Palace, Sarkozy's official residence, people were "laughing out loud," according to insiders.

Barroso and Van Rompuy have since scaled back their ambitious plan a bit. They are now meeting for breakfast every Monday.

Hans-Jürgen Schlamp is DER SPIEGEL's Brussels correspondent.
06/02/2010

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Wednesday, June 02, 2010

A STRONG EURO ??? - WHY ?????

 THE TODAYS  POLITICAL POWERS OF EUROPE,WHICH  ACTUALLY ARE THE SAME  (CONSERVATIONISTS,RIGHTISTS,SOCIALISTS,LEFTISTS,COMMUNISTS ETC) WHICH WERE IN CHARGE BEFORE AND DURING CRISIS ,ARE TRYING TO FIND WAYS IN RESOLVING THE  GLOBAL PROBLEM ,BY DIMINISHING ITS POTENTIALITY,TO A TERRITORIAL ONE.

AS EUROPE IS GOVERNED TODAY BY THE CONSERVATIVE EXPRESSIONS OF GLOBALISATION,THEY ARE IMPLEMENTING CLASSICAL POLICIES OF THESE KIND OF THEORIES.
THE NEXT STEP IT WILL BE AFTER SOME YEARS TO TRY ALSO THE OTHER OPTIONS. 
THEY FOLLOWED FIRSTLY THE GIVEN SOLUTION OF USA,BY REFINANCING "MARKETS" (SEE UNPRODUCTIVE FINANCIAL ENTITIES,WHICH WERE THE INSTRUMENTS FOR THE CREATION OF THE BUBBLES),WITH 750 BILLION EUROS.
AT THE SAME TIME THEY ARE CUTTING PUBLIC COSTS ,WHICH ISN'T SO BAD,AS PUBLIC SERVICES GENERALLY SPEAKING ,HAD BEEN VERY COSTLY,TO THE CITIZENS (BY THE MEANING OF BUREAUCRACY AND HUMAN RELATIONS).
NEW SEVERE REGULATIONS WILL TRY TO CONTROL BETTER THE MARKETS,WE BELIEVE WITH POOR EFFECTIVENESS. 
THE RESULTS WILL FOLLOW THESE OF USA BY 1-2 YEARS OF DELAY,DEBTS BEING AUGMENTED IN A  GLOBAL LEVEL.
OUR  PROPOSAL IS BASED ON A WEAK EURO,IN ORDER OUR SOCIETIES ,BASED ON  AN OECOUMENIC PERSPECTIVE,BEING GUIDED BY A STRONG EUROPE,TO LIVE IN PEACE AND HARMONY.

PS.BY CLICKING ON THE TITLE WE  SHALL  BE REDIRECTED TO AN ARTICLE OF 2006 



Resurrection of the Euro-European Austerity the First Step to Recovery

Austerity programs are all the rage in Europe. Several countries have pledged to slash spending by billions in a frantic effort to balance budgets and save the euro. Economists say that it might work -- and that the US should take notice.
The good news came from Frankfurt on Wednesday: Germany's central bank, the Bundesbank, estimates that the country's budget deficit will not be quite as gaping as the government had feared. With the economy recovering more quickly than expected, the 2010 deficit will only be roughly 5 percent of gross domestic product, the Bundesbank wrote in its monthly report. In January, the government of Chancellor Angela Merkel had forecast a deficit of 5.5 percent.

Still, the report encouraged the government not to ease up on its efforts to cut spending. "Given the high deficit and rapidly climbing debt, potentially positive (economic) developments should not be seen as providing budgetary flexibility, but should be used to further consolidate," the report warned. It is the same message that is being heard in capitals across Europe these days.


Italy is the most recent example. On Tuesday evening, Prime Minister Silvio Berlusconi announced an austerity package worth €24 billion -- a savings plan that came as a surprise to many. The measures include cuts in civil servant salaries, pared down regional and municipal spending as well as tax increases. "The state has to cost less, that's the main point," said Berlusconi not long after his cabinet adopted the measures.

It seems to be a message that many in Europe have adopted as their own in recent weeks. Countries in the euro zone finally seem to be pulling together. Everywhere, the goal is the same: budget consolidation.

Preparing for Growth

Spain has even gone so far as to further tighten a package of austerity measures it previously introduced. In 2010 and 2011, Madrid wants to spend €15 billion less than first planned, a sum which represents 1.5 percent of the country's gross domestic product. Like Italy's savings package, Spain plans public sector salary cuts, a pension freeze and cuts in public spending. Value-added tax is to rise as well.

The Greek austerity program is even more extreme. Under the stewardship of the European Union and the International Monetary Fund, Athens has pushed through a package of measures worth some €30 billion by 2014 -- equivalent to 13 percent of the country's GDP.

"Crises often present opportunities, and it looks like Europeans are eager to take advantage," says Michael Hüther, head of the Institute of the German Economy. He particularly welcomes the broad spending cuts. "Many studies show that such measures prepare the way for above average growth."

Is Europe back on track? Will the euro zone succeed in regaining its strength? Financial markets are still skeptical -- as are ordinary Germans. According to a survey carried out for Stern magazine, more than three-quarters of Germans are concerned that public debt will get out of control. Some 59 percent fear that politicians will not be able to deal with the current fiscal problems.

But in the light of the efforts of the past few weeks, many experts are beginning to feel a sense of optimism. "The crisis has forced Europe to act together, and the countries have actually managed to find a common position within a short space of time," explains Roland Döhrn of the Rhine-Westphalia Institute for Economic Research (RWI) in Essen.

Strong Currency

Indeed, the measures agreed by EU finance ministers in Brussels are much larger than anything that has been done in the past. The gigantic €750 billion rescue package was primarily intended to send a signal that Europe and its single currency are strong, and that European politicians are capable of taking effective action to defend it.

The package managed to temporarily calm the markets and reduce fears that the euro zone might break apart. But the rescue operation only makes sense in the medium- and long term if the EU's heavily indebted countries also clean up their finances. Now it looks as if this is exactly what is happening.

"The message has been heard: Deep cuts are now necessary," says Josef Kaesmeier, chief economist of the private bank Merck Finck. Even if Spain or Greece were to slip into recession due to drastic austerity measures, there is no alternative to their course of action, Kaesmeier says.

The economist sees much bigger problems outside the euro zone. "I'm worried about what's happening in the UK and the US," he says. "The Americans say: The dollar is the global currency, and we'll happily keep on printing money. Instead of cutting spending, they are simply passing one economic stimulus package after the other."

Eugen Keller, a foreign currency strategist at Metzler Bank, also sees the US as being the "epicenter of the crisis." For the past 20 years, he says, the world's largest economy has lived beyond its means. "That's not going to end well," he says. He argues that respectable businessmen in the current situation would tighten their belts and fix their balance sheets. "But that isn't happening in Washington," Keller says. The financial expert also believes the situation in Europe has eased in recent weeks.

Model for Europe

The current savings efforts being undertaken by euro-zone countries is one reason. But they do not guarantee that such a debt crisis won't repeat itself in the future. To prevent that from happening, the EU wants to reserve for itself more power to review national budgets of member states. German Finance Minister Wolfgang Schäuble and his colleagues in the Finance Ministry want Germany's balanced budget law -- the so-called debt brake constitutional amendment -- to serve as a model for Europe.

If budget deficits in the EU are actually punished to a greater degree in the future, the financial markets could quickly regain trust in Europe and its currency. "Europeans don't need to be modest when it comes to their economic power and the ability of their companies to compete," says Jörg Hinze of the Hamburg Institute of International Economics. German companies, especially, he adds, have no problem competing globally.
But for Germans, it is also important that the euro is perceived by financial markets as a haven of stability -- not least because insecurity drives up interest rates on the loans needed for investments.The first steps toward guaranteeing that stability have been made. Even Silvio Berlusconi has pitched in.

SOURCE DER SPIEGEL With material from wire reports


 
 

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