A Few Questions for the Leaders of the United European Nations (Part 1)

Putting on the “developmental economist” hat, Colorfulifesite asks a first set of questions with the hope to determine how inclusive is the EU of its citizens in implementing the European mission and reaching its vision.

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Image courtesy of: Wikipedia

The European Union is currently faced with an economic crisis, a migration/refugee crisis and perhaps just recently, an identity crisis following the Brexit. During this moment of distress, doubts and skepticism, what is being done to unite the people of the different European Union countries?

A very important catalyst for unity is patriotism; and it rises from each and every countryman’s heart when any aspect concerning his nation is being threatened. Perhaps most of these feelings stay just like that, without being converted into an action of any sort. But the people are strengthened, they are inspired and in their own little ways they make the best of what they have to contribute to the mitigation of the said crisis.

Another factor that unites a population is pride. The American patriotism is partly based on their pride over being the superpower of the modern world (Thanks to the Yankees winning the civil war, progress and efficiency were stimulated!).

The French are also demonstrating a great example of patriotism and pride. And why should they not? They are bound to, and by, the victorious eradication of the monarchy, which paved the way to constructing the great Republic that they have now.

The examples mentioned above were obtained through victories in wars. Perhaps the EU could set a “first” by uniting the people in this period of nonbelligerence? Wouldn’t it be worth considering to strongly promote rescue missions, development and cooperation collaborations, international aid and other peaceful interventions executed under the name of the EU? this way, Europeans could take pride in identifying themselves as citizens united towards the mission of achieving social, economic and political justice…

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As a response to the Financial-turned-Sovereign-Debt Crisis, “the EU and its member countries have been strengthening financial sector supervision”.

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The immediate response to the economic crisis consisted of rapidly setting up financing facilities for euro area countries experiencing severe financial problems. This measure not only solved the urgent needs of some countries to repay their debts, but it also boosted the morale of financial markets thanks to the projected effort towards a more stable euro area.

Complementing this initative is the creation of 3 European supervisory bodies, namely the European Banking Authority, the European Securities and Markets Authority and the European Insurance and Occupational Pensions Authority “to ensure that banks are better capitalised, behave responsibly and are able to lend money to households and businesses.”

The aim of course, is to protect people’s deposits and void forcing the taxpayers to carry the burden of a bank’s failure. At the same time, financial markets were calmed down even if their confidence has yet to be regained.

Institutionally, the problem seems being dealt with. But what mandates are being issued* to encourage governments to educate their citizens with basic financial concepts, risks and opportunities?

After all, the trigger of all this was the disaster in the American banking sector, brought about by the careless granting and obtaining of mortgages. Basically anyone who could write his name was granted one (or more!) of these. Even then, the ordinary people’s financial illiteracy caused them to take on more credit than they could actually repay. The situation was bound to be unsustainable from the start. Hence, the fallout.

When the crisis broke in Spain, many people who deposited their faith (no pun intended) on participating preferred stocks were buried even deeper into the pit. Mainly, they did not know what they were signing up for, the moment they were handed this product. Although this event was heightened by and did not cause the country’s financial crisis, it shows how the best way a person could protect himsef is through information. The capacity to discern right from wrong, logic from fantasy, facts from sales pitches and so on, is still the best defense**.

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This could be a personal impression but, did Brussels seem more engrossed with the Greek (as well as the Spanish and Portuguese) financial crisis than the problems with migrants and refugees?

The question refers to the apparently disproportionate attention, analysis and media coverage as to “why”, “when” and “how” both crisis came to be. When the news about the Greek “mess” came to light, immediate investigations were done to discover the root causes of this salvajada.

The same could still be done with the current human crisis: we already know what the “pull” factors are in the grand scheme of things. Studying and informing about the “push” factors would be more useful for everybody- from policy makers to ordinary people. 

Greece, Spain and Portugal were under very tough scrutiny during the worst moments of the financial crisis. In the same way, the countries of origin of migrants and refugees could also be the object of close examination to learn what reasons motivate their population to leave.

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Image courtesy of: openeurope.org.u

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Thank you in advance for your thoughts, corrections, suggestions and questions.

 * Accession to EU was conditioned by several convergence criteria such as capping the inflation rate (as % of growth), the public sector deficit and government debt (both as % of GDP). These criteria pressured the candidate countries to work towards compliance, with strong and at times adverse consequences to the ordinary people’s quality of life during the period of adaptation. Similarly, the European authorities could agree on a decree obliging country members to better educate their citizens (or at least any adult who makes use of financial services) in financial matters.

** Even something as basic as knowing that return rates on investments are directly and inversely related to the risks would already be a big help. See: http://www.investopedia.com/articles/fundamental/04/061604.asp for more information.

Sources:

  1. http://www.encyclopedia.com/topic/European_Union.aspx
  2. http://ec.europa.eu/economy_finance/explained/the_financial_and_economic_crisis/why_did_the_crisis_happen/index_en.htm
  3. “The Observer view on Europe’s migration problem”, available at: https://www.theguardian.com/commentisfree/2016/jan/24/mass-migration-problem-europe
  4. “EU leaders must finally begin to address the root causes of the migration crisis”, by Stephen Booth and Pawel Swidlicki, available at:http://openeurope.org.uk/today/blog/eu-leaders-must-finally-begin-to-address-the-root-causes-of-the-migration-crisis/
  5. Lessons from Spain and Portugal in the European Union after 20 years”, by Sebastían Royo, available at: https://www.cairn.info/revue-pole-sud-2007-1-page-19.htm
  6. “El Engaño Masivo de las Preferentes”, El País, available at: http://economia.elpais.com/economia/2012/09/13/actualidad/1347534473_888418.html
  7. http://ec.europa.eu/echo/refugee-crisis_en
  8. http://ec.europa.eu/dgs/home-affairs/what-we-do/policies/european-agenda-migration/index_en.htm