martes, 19 de julio de 2011

"Why the euro crisis has just got a lot worse"

This is asked at the front page of my copy of The Economist, always arriving late here in Barcelona while I already could get one in the kiosk with a print date on the 16th. This has nothing to do with the crisis, this is the best the Spanish national mail company can do.

Now back to the title. Why or where did it get worse?

Without reading the articles yet, which certainly will be of interest, we all know it got worse because no real decisions have been taken so far.

It is like politicians live in another dimension where realism is not needed and it is all about positioning.

Own positions to be precise as when really helping their countries decisions would have been taken much faster (although that is why they are elected and get paid for by taxes).

In a divided Europe without jurisdiction for hard and unpopular economic measurements group wise no individual politician is willing to risk (its position) or can because of nationalism.

Even those in the local opposition, crying loud blaming the government for every crisis being their entire fault, have no real answer. It is just a matter of postponing and hoping of some market miracles. Like it solves itself or gets better.

Should we really be worried? Yes, we should but the world will not stop turning. Some will be less hurt than others but a new (or better prolongation of the current one) crisis will cost us much more.

As explained by many, like The Economist, it is not wise to keep on providing more and more aid without real reform, without signs of countries going deep to restructure debts and rebuild its economies.

Unfortunately politicians do not take decisions, they only extend problems. They do not solve problems; they leave them for their successors. They want to shine and be remembered as good leaders in the short period they have their stages.

It was like this for 50 years how developed supported developing countries where now after all we know what really happened with our (tax) money and finally some organizations decided to give aid differently.

It is time for the old democracies to do the same and perhaps it is therefore that this has to start with Greece getting down where it all started once followed by for example Italy as another former empire.

As long as politicians do not see a need of putting aside their own interest (from the US till China, from The Netherlands till Argentina, from Japan till Canada and from Russia till South Africa) there will be no real change.

Real change means a new era of communication and cooperation. Instead of contradictions (good example the current fight of Democrats & Republicans in the US) politicians should demonstrate they really care.

If the next 6 months the politicians in the euro area cannot find agreements on the future of the euro and the battled countries but only increase emergency funds more will be destroyed of what slightly has recovered the past two years.

This will mean more problems for Ireland, Portugal, Greece and also Italy will no longer be able to avoid real domestic trouble. It will mean more pain for Spain where corporate and public restructuring will increase unemployment up to 30% or even more.

Elections, sooner or later, will not change much. Like Spain many are too divided with too many individuals rather looking for personal gain than reforming a country. At the end reforming is tougher than leading a country in healthy times. Who wants to be the one making unpopular decisions?

Spain for example needs to restructure public domain, education, housing markets, its competitiveness in services and products and for sure its political systems. Who will do that? Will it really happen after 30 years of pampering by Brussels? Or do we need to wait for a next generation?

That is perhaps the real problem. We got spoiled with social security and by prosperity named consuming. Developing countries can no longer develop because all immigrate while developed is getting stuck in its own social systems. The longer this continues, the worse it will get.

Where are the type of leaders of 50 - 100 - 500 years ago that reformed countries after wars, revolutions, decolonization and human development? Where are those dare to say we failed? Which politicians can be realistic and dare to tell (us) the truth?

Or do we really need again these wars and revolutions to realize that what we have created is only to show off, for personal gain or to suppress others?

Compared to what human kind experienced so far historically any euro crisis is child’s play but let’s hope some adults stand up and make real history. It has been too long ago!

viernes, 1 de julio de 2011

Cooperation and communication; the key to (do) better?

In business and in politics it is the hardest to do; working together (to benefit together). Examples enough but let us focus on a few to end with the key.

Since Obama is president Republicans do their best to disorganize him; nothing wrong with reminding him of promises, criticizing and delivering better solutions though.

Unfortunately that hardly happens. Too much is at stake, so instead of handing over solutions they fight him internally. The biggest enemy of the US is their own political scene which decides the future.

Obama needs more support now because if he looses the next elections the Republicans will have to continue with a sloppy economy, high unemployment, the same health care problems and a huge deficit or even default. Not even mentioning the foreign threats and costly activities.

Instead of working together to fix the economy, to become more competitive, to protect the quality of life, education and human capital a few men decide they are more important. Or worse, their religion is more important.

Now this selfishness in politics is not new or can be solved easily. But why are most involved in corruption, taking advantage of tax payer’s money, not admitting any wrong doing, always blaming the other (party) etc?

Especially the past five years in perhaps the worst economic and financial crisis, the slow recovery, the global changes in terms of power and where the next generations are not ready to take over, this does not look very hopeful.

So, why do parties not work together? Why do we, the public, not force them? Why is the public a lame duck in every democracy? Are we too spoiled, too much pampered the last 50 years, too fat and egocentric to care about the next 50 years?

Talking about facts; with the highest unemployment in the euro zone Spanish politicians only accuse each other instead of working together. The results are and remain poor while elections will not change that despite the "promises".

In other countries like Argentina there is insufficient opposition to make a change. Where the rest of Latin America the past ten years could benefit from domestic reform and new strengths it seems the Argentine government is only doing what they did the last decades; taking care of those in favor of the government.

When the public cannot undo the way their politicians rule their country, even not after heavy and violent protests, the only hope is a global recovery of the economy. In that sense the European Union is better positioned than the Americas.

Despite Greece, Portugal, Ireland, Spain and Italy the other 25+ are doing better or not worse; a collective where the pain can be better spread (as the end of the pain is not in sight yet) than individual countries like Argentina or even the US.

Still even this patient, the EU, has to remove some tumors first. That can be done without loosing membership but to get an agreement about measurements, penalties and paybacks (lost investments) but a lot time is not left for clear decisions.

The next two years will be decisive for the next five years, just as the past seven years. Some will unfortunately not be able to make changes in time, some will. Those who will probably can lift some others till the next downturn.

It is too early to speak of an upturn and the recoveries have been short lived. Changing governments will not help much in this climate. Only when business and political leaders open up to their opponents proposing real cooperation and improve communication real solutions will be achieved sooner.

As soon as the signals are positive again the different parties can go back to their "individuality and ideals" but perhaps this united moment feels good. Would that not be a victory for all? Fighting the crisis together and continue working together on a better country?

The question is if these leaders really would like to have a better economy, better corporate results, better lives (for others etc). Because when things are going better, they will have competitors doing better and that is a threat to many.

It also marks that leaders are in fact not really leaders. They are scared old man (and some woman) not being able to do what they should do in their positions. That is why many fail while those who are successful shift places to continue their road.

As long as most leaders are not willing to share, only look at the short term and do not care about the happiness of others, any corporate, national or family crisis will take longer and a new one will be waiting.

Change will only occur when we really want to change and unfortunately this depends too much on some of us that decide for our future. When they do not change sooner or later we have to pay the bill (again) and the damage is done (again).

The key to do better fits in all doors but some doors will remain closed. Not because of the key or the door but because of the person that decides not to open. If only that person could agree here......