The Slovenia Times

The Credit Rating of the Global Economic System



The project of European Monetary Union has been dangerously asymmetric. On the one hand we euphorically introduced the Euro and centralised monetary policy. On the other we neglected stability of public finances and deeper coordination of fiscal policies. Thanks to excessive bureaucracy and the weakness of major European institutions and their "democracy deficit", the EU was not able to form a foundation of common economic policy within a changing world. It has especially struggled to adapt to the shift of economic power between the United States, Europe and BRIC countries.
The current problems of the European Union at the strategic level are primarily the result of blindly following the old prescriptions of economic development: glorification of free trade with hidden barriers to protect the developed world; creating a constantly growing global demand for your products; invention of methods and financial instruments for generating additional unrealistic purchasing power along with unnecessary services and products; maximising corporate profits at any cost by moving production to underdeveloped countries; and so on... And all this without taking into account local and global environmental and social constraints. The result of such a policy is that the EU is facing the constant loss of jobs in traditional industrial sectors; those jobs are moving to cheaper, more flexible, underdeveloped countries. Slovenia is especially suffering in this way.

A glorified concept

As a result our (until recently) glorified concept of the "knowledge society" has remained without real funding. Everything together is resulting in a vicious circle of irrational regional hyperproduction, increasing social differences between different regions and nations; decreasing general purchasing power, structural budget and balance of payments instabilities. This global race for profit and GDP growth as the mother of all indicators without appropriate institutional corrective is causing extremely accelerated environmental degradation and social stratification in developing countries. This instant concept of development, combined with political instabilities in the developing world, can result in an explosive mix and global problems of previously unseen dimensions.
The United States is tackling the problem in the old manner, trying to fix "presumably temporary instabilities" and continuing with business as usual. At any cost and with all means they try to maintain the leading position in the international political community and in the global economy. So far they have managed to effectively neutralise their economic problems and finance growth through public-debt-resistant global currency, the US dollar. Many feel that the current behaviour of credit rating agencies - all of which are based in the US - can be understood as part of Uncle Sam's global policy.

An important lesson

The current crisis is therefore an important lesson for the whole of Europe. Will the EU understand that, aside from the urgent adaptation of consumption on all levels, it needs to redefine the real income to correspond to the concept of development and global policy? If not, it can just stay with the "go with the flow" policy directed from the other side of Atlantic. In the past Europe has, with the concept of the welfare state, shown that development is not just constantly growing profit and competition between countries and citizens. Development can also mean solidarity, quality of life and a healthy, creative, peaceful environment - within, of course, a real and sustainable financial framework. A policy which assumes that the current situation will improve only with short-term financial consolidation and the adoption of some structural reforms simply doesn't understand the real scope and nature of the problem.


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