The Broker Online
The Broker Online

Author

Frans Bieckmann

Frans Bieckmann

Frans Bieckmann is Strategic Advisor at the Gemeente Amsterdam. Since The Broker started in 2007, Frans has been editor in chief and, since 2013, he has also been the executive director. He left The Broker in december 2017. Frans studied international relations at the University of Amsterdam and has 30 years’ experience as a researcher, journalist and advisor on issues of development and globalization. He has advised a number of development organizations and government institutions and has been published in many newspapers, magazines and journals. In August 2012, Frans published the book Soedan – Het sinistere spel om macht, rijkdom en olie, a detailed analysis of international involvement with Sudan and the conflict in Darfur.

Europe and the financial sector: a continuing love affair

After a few years of crisis-born reticence, the European Commission is back in love with the financial sector. Presented as a way of stimulating the dragging economic growth in the EU, the Commission has recently proposed a series of new financial reforms called the Capital Markets Union (CMU). Although promising to set the stage for growth, jobs and investment in small and medium sized enterprises (SMEs), the effectiveness of the reforms proposed by the Commission is broadly questioned. Especially the stimulation of ‘loan securitization’, a complex financial product comparable to those responsible for the financial crisis of 2008 in the United States, is cause for concern.

The Eurozone crisis: not time to relax yet

Since the summer of 2015, European media and politicians have devoted significant attention to the refugee crisis. As a result, the crisis in the Eurozone, which had previously dominated discussions in the media and among politicians, seems to have disappeared.

The rebirth of the Eurozone: A living analysis on the alternative routes out of the euro crisis

Is the current recovery policy for the financial and economic crises in the Eurozone a genuine answer for the complexity and diversity of the problems that all member states face? Not really. The responses are too one-sided and mainly export and austerity driven. In particular, the current policy ignores the fact that the euro crisis is a systemic crisis that cannot be overcome with more of the same. This euro crisis living analysis showcases in an innovative and interactive way that there are feasible alternatives that not only could bring back some economic growth to the Eurozone, but could also ensure that the recovery endures and includes all the people of Europe. This requires a dramatic rethink on debt restructuring, rising investment levels without triggering over-indebtedness again, and a systemic change of the financial sector industry. Such a strategy should be combined with a wage-led growth strategy based on more and better jobs to reverse the race to the bottom of the current supply side and export-led competitiveness strategies in the Eurozone. Only then is a healthy future for the single currency possible.

Debts and imbalances

The structural causes of the euro crisis – high unemployment, low growth rates and debt-ridden states in the eurozone – are not the fault of lazy Greeks, Portuguese and Spaniards. The euro itself cannot be blamed either. The problem is that the European single currency is part and parcel of an economic and financial model which contains all the ingredients for the current crisis. For example, deregulation of the financial markets went hand in hand with indebtedness of the eurozone countries. Economies within a single currency zone need to harmonize, but the national economies in the eurozone developed in very different directions, increasing the imbalances between the member states. The key to finding the right answer to the crisis is understanding the debts and imbalances in the eurozone. Just blaming debtor states like Spain, Portugal, Italy and Greece and focusing reforms on them, as is the case at present, is to ignore the whole picture. Other solutions for recovery were possible, but a deliberate policy choice was made to offload all the rebalancing efforts onto the weakest economies.

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