what’s up EU?

1 luglio 2016 § Lascia un commento

Good Morning

By taking inspiration from HBR – below an article of Fernando Fernandez – i would like to share some thoughts:

  • What’s up next?
  • The BREXIT is a fault or is an opportunity?

In my personal opinion, in the next few month nobody will talk again and the UK will continue to leave and growth without any problem; right now there’s so much interest in Financial and taxes level in UK that nobody in EU are able to sustain, only Netherland can offer the same level.

About Germany as indicated to Mr Fernandez, is  ore in trouble then what they show and say they have:

  • Greece debit on their back – Bailout Greece=bailout of Germany and France
  • Deuthbank – billions of debit
  • the level of the debit of the people are very high.

Then, i would to invite some Expert to evaluate and make a simulation of the new Scenario.

have good day
For the first time ever, a member state of the European Union has decided to leave. Beyond Brexit’s dire implications for the British economy – a prolonged recession is a good bet, and London’s future as a global financial center is uncertain — four main questions puzzle investors and politicians around the world:

What will Europe look like?
The first question involves both political and economic risks. The European Union is a fundamental ingredient of the institutional framework put in place after World War II. The Union has unquestionably been instrumental in a very long period of peace, stability, and growth grounded in economic interdependence, open markets, and international cooperation.

But now there is a chance that nationalism, isolation, and confrontation will replace the existing world order. Brexit may only be a sign of more to come. Europe is clearly having a hard time dealing with the consequences of globalization and the loss of its exceptionalism. Anti-establishment political parties seem to thrive everywhere, from supposedly stable and successful states like Germany and the Netherlands, to countries facing economic difficulties, like Italy and Spain. In this context, there are plenty of other candidates who might leave the Union. And the United States has its own problems with populism and isolation.

Can the euro survive?
Although the United Kingdom did not use the euro, the viability of the currency is still affected by Britain’s vote to leave the EU. Brexit reopens the possibility of a euro breakup, because it highlights the loss of sovereignty implied by European Monetary Union (EMU) and the remaining requirements on monetary, fiscal, and financial union. In the current political climate, with German and French leaders struggling for popularity, it is difficult to envisage a renewed commitment to deepen economic and political integration within the EMU. And without this deepening, market doubts on the sustainability of the euro can only grow.

The idea of a “two-speed Europe” is lethal to the economic recovery and growth of periphery countries, where any doubt about the continued support of the European Central Bank — and an eventual resolution to the debt crisis through an Euro Area fiscal backstop– can only bring further difficulties.

Will this uncertainty bring an abrupt end to the mild economic recovery?
The short answer is that Brexit has made recession in the UK and in Europe both more likely. The two-year period to negotiate a new agreement with a departing country stipulated in Article 50 of the European Treaty makes no sense to financial markets. They will not wait for European leaders to make up their minds — as we already witnessed Friday, where stock markets in periphery countries fell more than any day in the 2008 crisis. The thought that such uncertainty may not affect the U.S. or the global economy is pure fiction; after all, Europe amounts to about a third of global GDP.

If recession is now in the cards, how can policy makers react?
Central bankers around the world are monitoring events closely, and their policy tools — swaps, liquidity, further quantitative easing — are ready to be implemented. It seems likely that the Federal Reserve may put its rate hike on hold.

But there is only a limited impact monetary policy can have in the current circumstances. The problem is political, the uncertainty is fundamentally political, and the solutions need to be political. Postponing hard choices does not appear a reasonable strategy.



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