News. BRUSSELS (Reuters) - European leaders struck a deal to provide financial aid to Greece on Thursday, in an unprecedented move to stave off a broader crisis in the 16-nation bloc that shares the euro single currency.
Germany and France are expected to take the lead in providing support, in part because other big euro zone economies like Italy and Spain are themselves under financial pressure.
My point. I have maintained, over and over again, that common currency areas cannot put together low productivity countries and high productivity countries under the same economic umbrella.
The low productivity countries will pay a dear price because investment capital will flow from low productivity to high productivity areas.
Make no mistake about it. The problems of Greece, Spain, Portugal, Italy, and the UK are not budgetary. They are related to their spend, spend, spend programs to pacify the population completely disregarding the policies needed to improve their competitive position and create the wealth needed to meet the largess of their social programs.
The problems of Europe are immense and are not going to be solved with short-term financial aid.
The markets always win.
George Dagnino, PhD
Editor, The Peter Dag Portfolio. Since 1977
Ranked Top Market Timer in 2009 and 2010 by Timer Digest
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