First 20 minutes

12/1/2011 5:27:00 PM

A bit of a background, I dont know if ms. Paderon taught you, Im teaching European Business courses here, because I have worked in Europe as an investment banker in Vienna and I have a business in Austria. My kids are all in Europe. All in europe, most of my life, I just came back here and worked in Ateneo, I could not travel that often. Before, I was there until 2003. When my youngest kid graduated in Ateneo, I started teaching here. Its very easy for us to find a job, even in a tight market such as Europe. My son was working in Dublin when its economy was going down. The skills and knowledge we have acquired in Ateneo can really match the education present in other schools abroad. I studied London Business school abroad, I was a bit insecure. By the way, Im organizing an international conference next week. BLABLABLA CONFERENCE The EU is composed of 27 member countries, started with 5 and increased up to 15, then in 2005-06 this was increased by another 10, plus 2, with Romania and Bulgaria as latest. Some of these members are members of the Eurozone, countries which have adopted the Euro. If you are joining the eurozone, there are certain requirements which you have to meet. One of the most basic requirements that you have to comply with is that your external debt should not exceed 60% of your GDP. Then the other significant criteria is that you have to have your debt at not more than 3% of your GDP. Then you have several others, such as that your interest rates should not exceed the average of the top three countries interest rates. There is a premium. Anyway, the problem is this. Most members are actually paying lip service to this criteria. The so-called Maastrict criteria, SGP (stability and growth plan criteria), Even big economies were not observing it. Germany, Austria were

exceeding 60%. I could already sense before that a crisis was imminent, especially if you just keep borrowing and borrowing and you are not doing any improvement in your productivity. To make matters worse, in 2007, the EU were hit hard by the subprime US crisis, complicating the whole situation. They were already in crisis, even without the subprime crisis. One Bank in Austria, the biggest bank, lost about 5 billion euros. Last year, the EU central bank conducted a shutdown and Bank Austria was not included, so apparently they avoided shutdown. Going back to the problem, these so-called PIGS (portugal, italy, ireland, greece, spain) were the problem member countries of the Eurozone. Two of these were stellar performers before 2007: Ireland was performing quite well (the IT center of the eurozone). Spain has been consistently nudging past the growth rates. I was assigned to look into a regional airline company which was filing for bankruptcy. At that time, spain only had smething like $2,500 per capita GDP. Before the crisis, it had $25,000. It had a fantastic growth rate. So was Ireland. But because of the heavy debt burden, it has created problems in their respective economies. For one, Greece had alredy been expeirnceing debt beyond the 100% mark. Now its at 130%. Italy has 120%. It was at something like 1.9 trillion euro. Portugal is relatively small. Greece has been too lack;;;; in its fiscal discipline. Greeks didn't pay much attention on ratios, on faithful servicing of its debt. There was really no belt-tightening before the crisis. They just kept on spending as if they are not going to pay eventually. So now that the situation has made a turn for the worse, naturally, the belttightening that the Greek

12/1/2011 5:27:00 PM

12/1/2011 5:27:00 PM