Fiscal crises threaten Europe's generous benefits

ah shucks...thought they were perfect? Reality is setting in.

cherished by many Europeans as an alternative to what they see as dog-eat-dog American capitalism

Life is struggle, embrace it and make something of yourself or run from it and get taken down in the end.

I had a German friend tell me the situation is like this: a Greek couple and German couple go into a restaurant. The German couple eat only bread and water and the Greek couple have a 7-course meal, but the German couple get stuck paying the tab for the Greeks.

There are a lot of political issues to be dealt with here, retirement at 60 being one of the big ones. The original idea behind government pensions was not to subsidize golfing and cruising holidays for old codgers, and they should be adjusted for the longer lifespans of today. But there is a big difference between fixing inefficiencies and pushing "austerity", which is just code for people paying for bankers' greed and politicians' incompetence / co-operation, so that they don't have to.

Bottom line is that government deficits are the symptom, not the problem. The problem is economic. They aren't running deficits because of the "welfare state", they are running them because they have screwed up their economic systems with huge debt-fueled Ponzi schemes. Between the fools who can't understand cause and effect, and the political ideologues who are going to jump on this for their own purposes, they are going to screw things up even more.

Between the fools who can't understand cause and effect, and the political ideologues who are going to jump on this for their own purposes, they are going to screw things up even more.

In Europe it seems not all cats are grey in the dark. But I don't want to be the party-pooper :|

At least the article touched the surface of the problem, mentioning briefly "the un-employed", which apart from a genuine few that really are job seekers are really a third generation of people that have never worked and never intend to. Oh, and we're rewarding them for breeding, right?

Sadly Euro politicians don't have the spine to tackle them so apparently we're going after the old people, motorists and even the handicapped for pete's sake.

Can someone out there with some economics clue me up here?

Who was that American dude, was it Franklin? Something about not leaving people in their misery but not making them comfortable......

The only thing that will save Europe from le crise is getting these low-lives back to work IMO.

how do you define comfortable madvert?

Come to France and you'll see. Rent paid by the government, bills paid by the government....christ, they even have special garages that fit parts for free for job "seekers". These people have no ambition, they're never going to go out and find a job, especially when their ambition is being at home smoking weed with the government picking up the tab!

It used to be an embarssment to be un-employed in post-war Europe. These days as I get up at 6 am to work harder to pay ever increasing social charges I wonder who the mug really is as millions lie in bed watching morning tv with a tab and a cuppa....

Sorry, really got my rant on there. It pisses me off we're going after pensioners and disabled people when millions shamelessly leech off those that work!

US wants Yuan to rise,so China can buy more. Why not let US dollar,Euro and others drop,then Europe,USA and others can sell more. Sell more means more jobs. High Euro and High USD makes global sales lower and thereby reduce jobs in EU and US.

The slight drop value in Euro or USD,let say 5 percent ,can increase jobs in EU and US by 5 percent.

"crises"?

rajakumar - but will people work after such a free ride?

Sorry should be la crise to begin with. The credit crunch as it's known here...

The author's view is a bit simplistic, isn't it?

When you look at the list of countries with high public debts, where is the correlation between debt level and "welfare states"? http://en.wikipedia.org/wiki/List_of_countries_by_public_debt

I'm too lazy to look up the figures, but I'm pretty sure that those countries in Europe with extremely high debts spend relatively (in terms of % GDP) less on welfare than the Scandinavian countries which the author cites as such good examples. It rather seems that too much money is funneled into other, non welfare-related, channels and cleaning up those should have highest priority. Look at the situation in Japan and you can get a feeling...

I certainly don't want to say that there aren't opportunities for cutting wasteful spending in the welfare budgets in Europe. But I think the numbers do not indicate that the European debt crisis is triggered by too high welfare spending and that cutting in these areas will not solve the underlying problems.

gonemad,

Triggered, perhaps not. I'm no economist but we have millions of life-long job "seekers" in France alone. And wxe're paying them to breed. And they seemingly do it a lot. It costs thousands per month per individual. Times that by a few million, then I'd say it's a pretty critical issue. I for one am sick of paying for these leeches and sick of leftist politicians using these people for votes.

The slight drop value in Euro or USD,let say 5 percent ,can increase jobs in EU and US by 5 percent.

Raja again you're spot on. It seems 'Bear' Bernanke has deliberately lowered the benchmark for the past 12 months anticipating rapid surge of jobs. But American jobseekers haven't been the clear winner-- so far, it seems bankers are.

We in Asia just need to look at Thailand, where the c. bank intentionally lowered i. rates-- yet bank lending have been dismal to say the least. The business sector remained stagnant because at the end of the day, the banking sector was mulling over one thing and one thing only, and that's liquidity.

Why not let US dollar,Euro and others drop,then Europe,USA and others can sell more. Sell more means more jobs.

Not necessarily, you have to realize that the US and Europe have highly sophisticated financial sectors--unlike China. Again, as I said, lowering rates doesn't mean banks in America and Europe will lend willy-nilly to prop up local businesses.

But it'll ensure big banks are rewarded by remaining competitive. Now that's an indirect bailout courtesy of the Feds.

Re. Yuan's appreciation--which is likely early next year-- it'll serve little influence to US, Europe monetary policies. I certainly don't think China's being stubborn about mandatory keeping the rates low. They certainly believe that the instruments available to them are still less sophisticated in containing unwelcome outcomes if they do so prematurely (just look at Japan now, and the Euro for the 2 last year-- then the Euro recently).

They, the bankers, can cry foul all they like, but any economic observers worth his salt will tell you that China as a financial powerhouse's still developing, and any suggestions that the Yuan has a much larger bearing to regional and int'l trends are certainly imbalanced.

Again, I doubt that a two-word solution, Yuan appreciation, will help revive debt-ridden countries like Greece. Nor will it conceal serious hiccups in the financial markets :|

The slight drop value in Euro or USD,let say 5 percent ,can increase jobs in EU and US by 5 percent.

Doubtful, with savings rates on the rise and heavy investment in intangibles a devaluation would only increase the debt. You want to increase the number of jobs either lower the min wage or make american workers more attractive in some other way.

You want to increase the number of jobs either lower the min wage or make american workers more attractive in some other way.

Good point here, certainly some in the Tea Party have suggested making wages the central issue in job creation. However, as an Australian I can say that targeting low to mid income earnings will be contentious given, as the case here in Australia, that the min. wage remained sluggish for the past 2-3 years.-- due to the GFC. It's a case to case basis though, and what you're saying really depends on many things.

What's certain, however, is the US adopting some rather populists platforms to prop up jobs. With the recent HR4213 raising the alarm bells of many big American companies

(Check The American Jobs Act 2010, http://waysandmeans.house.gov/media/pdf/111/America_Jobs_Summary.pdf)

As for Europe, Merkel's industrial relation policies had been exemplary with being able to achieve proper balance between sustainable growth and protecting the interests of German workers. Unfortunately, no one dared copy some of her good policies.