In recent months I had discussions with different people about the current financial crisis in the Eurozone and the media was full of news and analysis about the topic. Many things have been said about the wrong construction of the Euro, lazy states in southern Europe and politicians not able to find the right solutions and a straight way out of the crisis.
I did not hear about the responsiblity oft he economy and the enterprises being engaged in the Eurozone. Today then this article on n-tv „Investors fear for the Euro“. Here investors including representatives from privates banks raise their voice and complain about bad politicians who are not able to come up with sustainable policies towards the Euro crisis.
May I ask a question? At the time when the Euro was introduced who reduced the interest of government bonds for weaker economies in southern Europe? Who gave the money to these states more willingly? Have the interest rates be reduced via parliament decisions by politicians or did the free market itself settled this issue?
I cannot remember that the EU and its member states are responsible for setting interest rates. Thus the free market players gave the money for lower interest not thinking anymore about the different strength of the various economies in the Eurozone. There was hope that the Euro will produce a coherent economy ignoring the different capabilities of the countries involved.
If I’m correct the quintessence is that we just lacked more control of the free market? Is it another proof that the „invisible hand of the market“ is not working as it should? Why do investors complain now about incompetent politicians while they are the responsible players in the game?
Well, I’m looking forward to some decent answers from the economy – thank you!