Tuesday, February 9, 2010

The Millions in the European Union

My purpose is stronger than ever one Million Euros in less than 5 years, now I see this objective more than interesting due to the fact that during the week in which I moved my positions to a safer place, and just when I was ready to leave the coldness of Helsinki for a month in Mexico, and more than ready to enjoy the sun and the sand in the beach, I was surprised of the events during the last week in the European stock market's downfall, few colleagues and Pasive Investors followed my advise of cashing out temporarily (just in time) and come back to the Bullish market during March, I was surprised to find out that Greece has come under pressure to implement austerity measures after the European Union announced plans to monitor the country's efforts to cut its budget deficit

Pressure on Greece to get its public finances into shape increased during this weeks as the European Union announced unusually strict measures against the country. The European Commission, the EU's executive body, is to put Greece under closer monitoring than any euro-zone country has ever been subjected to and also criticized Athens for faulty reporting of statistics.

Speaking at a press conference Wednesday, European Economy Commissioner Joaquin Almunia welcomed Greece's new plan to reduce its enormous budget deficit. On Tuesday, Greek Prime Minister George Papandreou announced a package of austerity measures that includes a freeze on salaries in the public sector, a possible increase in the retirement age and a hike in fuel prices.

Almunia said that the Commission was endorsing the program, which he described as "ambitious" but "achievable." "We know that the implementation of the program will not be easy," he told reporters. "It's extremely challenging, but absolutely necessary and urgent."

However, the EU wants Greece to do even more and is urging it to adopt a "comprehensive structural reform package" that would include cuts in pension spending and reform of the health-care system. The Commission also wants Greece to increase the competitiveness of its economy by making its labor market more flexible, among other demands.

At 12.7 percent of GDP, Greece's budget deficit is more than four times higher than the maximum of 3 percent allowed under euro-zone rules. The European Commission's recommendations are aimed at bringing the country's deficit under 3 percent of GDP by 2012. I really want to believe that is possible but some experts will have to take control.Greece's progress and the new plans would be rigorously monitored through so-called "economic surveillance." Athens will be required to submit a first report in mid-March and will then need to submit quarterly progress reports beginning in mid-May.

It is the first time that the Commission is using such a strict monitoring system, but Almunia insisted the program "is needed given the circumstances." Greece must be prepared to adopt additional measures if the country was not on track to reduce its budget deficit by the agreed deadlines. The country is under massive pressure from financial markets and other EU members to get its finances under control. The budgetary crisis has caused the euro to fall against the dollar in recent weeks and increased the cost of borrowing for the Greek government amid fears it could default.

There is speculation that Greece may have to be bailed out by other EU members -- something the country insists will not be necessary -- and something I believe is not going to happen! and there are also concerns that the country's woes could have a knock-on effect on other euro-zone members with high deficits, such as Portugal, Italy, Ireland and Spain.

This should warn us Investors not to go too far yet, we have to remember certain meassures in this difficult moments, this is not as difficult as it seems we have to remember that the European Union has 27 member and every member state must fulfil the economic and political conditions generally known as the Copenhaguen criteria. These basically require that a candidate Member State must enjoy a secular, democratic system of government, together with the corresponding freedoms and institutions, and respect the rule of law.

It is not only Greece with high deficits but also Portugal, Italy, Ireland and Spain. I guess is just about time to learn some austerity from the Nordic countries and the Nordic Model. The Nordic Model refers to the economic and social model of Iceland, Denmark, Finland, Sweden and Norway. This particular adaptation of the mixed market economy is characterized by more generous welfare states (relative to other developed countries), which are aimed specifically at enhancing individual autonomy, ensuring the universal provision of basic human rights and stabilizing the economy. It is distinguished from other welfare states with similar goals by its emphasis on maximizing labour force participation, promoting gender equality and extensive benefit levels, large magnitude of redistribution, and liberal use of expansionary fiscal policy. The Nordic Model however is not a single model with specific components or rules; each of the Nordic countries has their own economic and social models, sometimes with large differences from the neighbours.

To conclude this post and get to undestand what has been called as a crisis in Europe a term that is exagerated at the moment, see the next video, and now that we are talking about Nordic countries a good example of a Nordic model can be provided by Finland and The Foreign Minister of Finland Alexander Stubb.

Keep writing to me it keeps me alive and the objective is there make it happen! the sand, sun and family are waiting here I come... Enjoy the video:


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