June 28, 2012
The European Council has started its works.
It is clear that we need a change in the strategy put forward so far. This was a two-fold strategy: on the one hand, it supports fiscal austerity through the Fiscal Compact, on the other, it aims at supporting the banking system through the injection of liquidity by the ECB.
However, this strategy is not working. Except form the beneficial effects of the liquidity injection, this strategy resulted in growing unemployment, weak aggregate demand and recession.
Citizens are likely to express their anger against this wrong therapy in any election.
Now we need a change and the European Council can be the starting point.
Today, European leaders have to take three decisions:
1) Renegotiate the Greek memorandum to avoid a grexit
2) Provide the European Rescue Fund with a Banking licence as it will be able to lend liquidity to governments and national banking systems.
3) Adopt a bold growth for employment and growth through the adoption of crucial measures such as a Financial Transaction Tax, Project Bonds, the recapitalisation of the European Investment Bank and the Golden Rule.
I hope the government will listen to these demands.
Otherwise, the situation will be very complicated and Europe will risk collapsing. In this case, we could say that “There is none so deaf as he who will not hear”.