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Here’s why Europe must do more to save its currency union

Posted on 17 October 2012

The battle to save the euro turns on one question: Can large governments, notably Italy and Spain, get their debts under control? Because they are in a monetary union, they can’t take the easy way out by devaluing their currencies to make their obligations smaller and exports cheaper relative to those of other countries.
Instead, they have to make painful budget cuts and slash workers’ wages to restore their competitiveness — moves that, in the short term, can make their debts less manageable by eroding economic growth. If the belt-tightening proves too much to bear, or if markets lose faith in their ability to succeed, the euro area will break apart………………………………………..Full Article: Source


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VRS - who has written 38089 posts on Opalesque Commodities Briefing.


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