European Leaders Collective Into Political Crisis

Submitted By: Himfr Tian
Some economists believe that loose monetary policy may be the last straw to save the euro, the euro has not reduced the risk of collapse, if the spread of inflation, the euro is even more dangerous situation. "

The first anniversary of the European debt crisis, the situation has not improved. On the one hand, the ECB large number of "pouring money" efforts to rescue the euro; the other hand, hedge funds and major financial institutions to make trouble and took the opportunity to make the debt crisis everywhere in the euro zone. Today, Ireland, Hungary, Spain, Italy and Portugal have a default risk, if this situation can not be checked, "spreading the money" inflationary pressures caused by the euro will eventually fall apart.

16 countries in the euro zone finance ministers meeting, the parties may formally approved the 85 billion euros for Irish aid programs, but opposes the expansion of 750 billion euros of the rescue fund size. This agreement was the International Monetary Fund (IMF), the criticism, but also to help the United States bent on Europe's "hot face" a cold butt paste.

From the beginning of this week, IMF President Kahn has been working to persuade the euro-zone finance ministers to expand the scale of relief funds, or allow the ECB to issue sovereign bonds in the euro zone to resolve joint debt crisis, but the central bank members felt that a second round of pressure on banks Testing is more important than the issuance of bonds.

December 7th, Kahn, after meeting with Greek Prime Minister Papandreou said that if the leaders do not want to adopt the euro zone to provide relief IMF proposal is best to ask themselves a viable option. Kahn believes that the EU needs is a package of relief rather than intermittent, "throwing money", "relief is not sporadic, so there will certainly be more countries into a debt crisis."

But the German view that the euro area have been built very strong safety net, save enough to save 750 billion euros in crisis countries, the most important thing is to stabilize the financial system.

Dutch investment bank ING chief economist Karsten Buzesiji commented: "Germany will be led by the euro-zone finance ministers threw the hot potato of the European Central Bank, the central bank will face unprecedented political pressure." A European Central Bank of anonymous sources, the central bank did not want the debt crisis by issuing bonds to save the country, they want the best capital increase through the IMF and the European Union.

Leaders of the collective settlement crisis

European leaders of the political crisis more serious than its debt crisis. The leaders of Greece and Ireland for support for debt restructuring and "downsizing" program plummeted, unless the other leaders did not touch the interests of the people while maintaining economic growth, or Portugal, Spain, Italy and Hungary, the country's leaders must face severe political crisis. German Chancellor Angela Merkel will become the most affected, because she is against expanding the scale and help the leaders of the central bank bonds. European Central Bank President Jean-Claude Trichet is to take the seats are also afraid of instability, intention of pushing him to step down countless people.

With the spread of the debt crisis, the euro under the weaker economy will certainly drag down export-oriented economies such as Germany, the pessimist believes that the collapse of the euro is from the "unthinkable" to "inevitable." European Central Bank President Jean-Claude Trichet said Dec. 2, to continue its benchmark interest rate at historic lows of 1%, and the banking sector to provide long-term liquidity measures for a further extension of 3 months, this decision is called "quantitative easing policy of the United States of the European miniature." Some economists believe that loose monetary policy may be the last straw to save the euro, the euro has not reduced the risk of collapse, if the spread of inflation, the euro is even more dangerous situation. Eurostat November 30 published data showed the euro zone the month annualized inflation rate was 1.9%, unchanged from the previous month. This means that the inflation rate has been 2% for two consecutive months approaching the warning line.