A neo-liberal approach to solve the current credit crisis in the euro zone.
The EOZB strategic research department for consideration of economic development came to the conclusion that the politics of the ECB in the current debt crisis break European law (Article 125 TFEU) and disrupt functional free markets. Our main conclusions and solution:
- There is too many debts circulating in the economic system. The payments of the interest rates drain the real economy, dry and disrupt the dynamics of the free markets.
- The current behaviour of states, the ECB and the regulators worsened the credit crisis by pumping too much credits into the system, thus increasing the debts of the whole system, which disrupts the dynamics of the free markets even more.
- Furthermore the ECB monetary policy is keeping insolvent Banks in business, by providing them with cheap loans reaching into the trillions. Additionally the accounting rules have been softened. Again the functionality of the free markets is strongly affected.
- The debt union, which will be cast into law with the ESM treaty, will extend the debt crisis from peripheral Europe to its centre, and all states will be drawn into it. This will result in social tensions in the entire European Union, as tens of millions of people will be forced into poverty.
- The banks of the countries affected by the crisis according to the latest figures of the EZM in May, have accumulated to € 9.4 trillion in debts, not to speak of the total debt in the whole banking system. A far-reaching bank bailout would thus draw all States of all sizes into the dept crisis and is therefore not an option!
- Banks which followed the wrong business model based on a false risk analysis and went bankrupt but are kept alive are endangering the entire system! Our research department has found the greatest risk for functional free markets in this socialistic policy.
- The real economy, the state and society are more important than the financial industry!
Conclusion:
The current debt policy follows only the interests of the big banks and the owners of capital and is not in the interest of the European population. Therefore it can be viewed as a corrupted policy. We believe that the players of the financial markets should be measured by their own philosophy. In this sense we propose a neoliberal approach following Milton Friedmans foot steps to solve the current debt crisis!
Debt relief of the entire system by cancelling all debts. Institutions going bankrupt, go bankrupt! Hereby the whole economic system would regain momentum and the States could again fulfil their job, because the crushing burden of the accumulated debts would disappear. The adequate instrument to soften the social turmoil would be the introduction of a basic income for everybody, financed by the EOZB. Also this would encourage the domestic demand. The flow of credit into the economy and the population would also be guaranteed by the EOZB. Companies within the real economy going bankrupt in the transition process will be nationalized and later privatized.
Of course we are aware that many rich people would lose a good portion of their assets. However, here we also see no problem, because if they are as good as they always claim, then they will surely come back to wealth. And here again the dynamics of the entire system would experience a huge boost at the microeconomic level by making the competition fairer again and so pushing the vitality of the whole system.
Furthermore the research department for strategic business analysis of the EOZB suggests all countries on the planet to do like Europe, so our global economy, freed of oligarchic structures can start to solve the problems of humanity, which we have accumulated since the last century, and thus allowing all following generations a future on our planet!
Finish:
Our current study shows that the neo-liberal financial actors don't have to throw all their habits overboard. After the introduction of new rules they will remain quite capable of acting on even terms.
The EOZB strategic research department for consideration of economic development came to the conclusion that the politics of the ECB in the current debt crisis break European law (Article 125 TFEU) and disrupt functional free markets. Our main conclusions and solution:
- There is too many debts circulating in the economic system. The payments of the interest rates drain the real economy, dry and disrupt the dynamics of the free markets.
- The current behaviour of states, the ECB and the regulators worsened the credit crisis by pumping too much credits into the system, thus increasing the debts of the whole system, which disrupts the dynamics of the free markets even more.
- Furthermore the ECB monetary policy is keeping insolvent Banks in business, by providing them with cheap loans reaching into the trillions. Additionally the accounting rules have been softened. Again the functionality of the free markets is strongly affected.
- The debt union, which will be cast into law with the ESM treaty, will extend the debt crisis from peripheral Europe to its centre, and all states will be drawn into it. This will result in social tensions in the entire European Union, as tens of millions of people will be forced into poverty.
- The banks of the countries affected by the crisis according to the latest figures of the EZM in May, have accumulated to € 9.4 trillion in debts, not to speak of the total debt in the whole banking system. A far-reaching bank bailout would thus draw all States of all sizes into the dept crisis and is therefore not an option!
- Banks which followed the wrong business model based on a false risk analysis and went bankrupt but are kept alive are endangering the entire system! Our research department has found the greatest risk for functional free markets in this socialistic policy.
- The real economy, the state and society are more important than the financial industry!
Conclusion:
The current debt policy follows only the interests of the big banks and the owners of capital and is not in the interest of the European population. Therefore it can be viewed as a corrupted policy. We believe that the players of the financial markets should be measured by their own philosophy. In this sense we propose a neoliberal approach following Milton Friedmans foot steps to solve the current debt crisis!
Debt relief of the entire system by cancelling all debts. Institutions going bankrupt, go bankrupt! Hereby the whole economic system would regain momentum and the States could again fulfil their job, because the crushing burden of the accumulated debts would disappear. The adequate instrument to soften the social turmoil would be the introduction of a basic income for everybody, financed by the EOZB. Also this would encourage the domestic demand. The flow of credit into the economy and the population would also be guaranteed by the EOZB. Companies within the real economy going bankrupt in the transition process will be nationalized and later privatized.
Of course we are aware that many rich people would lose a good portion of their assets. However, here we also see no problem, because if they are as good as they always claim, then they will surely come back to wealth. And here again the dynamics of the entire system would experience a huge boost at the microeconomic level by making the competition fairer again and so pushing the vitality of the whole system.
Furthermore the research department for strategic business analysis of the EOZB suggests all countries on the planet to do like Europe, so our global economy, freed of oligarchic structures can start to solve the problems of humanity, which we have accumulated since the last century, and thus allowing all following generations a future on our planet!
Finish:
Our current study shows that the neo-liberal financial actors don't have to throw all their habits overboard. After the introduction of new rules they will remain quite capable of acting on even terms.