//\\\EURO ZONE CRISIS

I have had many questions in regards the current EURO and Greece situation and I have written a brief scope on current activates facing us today and the future. Euro Zone structure The European Union knew that currency was insufficient when they designed it. This currency has no common central bank and also has no treasury unlike the US during the GFC that had the Federal reserve put into operations, regulations and rules. Australia was a clear example of increasing their interest rates to accommodate any such GFC crisis and minimizing it. This euro creation that the European unions have performed unavoidable, the Maastricht treaty was meant to bring about monetary union, this was also meant to bring a nonpolitical union. But as you can see that there has been nothing but political movement in the Euro zone. When the Euro was created the union were in no doubt that things would be fine, but when the euro zone ran into a calamity they thought they would be able to conquer it. Eurozone has not controlled there economy due to the lack of central bank, we have seen increased inflation over all the European unions also bring the effect of several stagflation cases. This is because the draftsman did not setup the euro zone correct. That lack of a common and un-regulated system was that bankrupt of Lehman Brothers on October 15 2008, At that time Angela Merkel, Germanys chancellor, said that each country should guarantee its own institutions, refuse and breaking the first rule of a union. Greece and Euro Rescue Package First was the Greek rescue package and its failure this is why you see

a second hand out, now a temporary Band-Aid emergency funding with a second bailout, Euro Zone reached an agreement on Greece second bailout package. The second bailout programme for Greece will involve financing of 130 billion euros and aims to cut Greece's debts to 121% of GDP by 2020. We all know that a 8 year guide line will not work meaning Greece will need to cut 15.1% of its GDP a year, so what happens if one year is missed? The problem that I see is not the fact that Greece has had two bailouts or liquidity injections given that is required, it is that there current economic structure could not be facilitate through these strict austerity measures. This is a simple analogy that I will use this to explain the situation: You have a swimming pool, half of the pool is ice the other half is water. We have Germany whos known as the head of the EU because they constituted all other EU countries to become a union. Now exclude Greece, Italy Portugal and Spain the rest of the EU countries are the ice. Greece, Spain Portugal and Italy is the water being Debt. The whole pool including the ice is the Euro zone being debt free. Now Germany and non debt riddled countries (EU) do a bail out on Greece so we lift the ice and drop it in the water were Greeces spot is in the pool, the water level in the pool will still be the same level again as it originally was when we lifted the ice. Thus meaning that the debt will always be there because the structure of the EU was incorrect from the beginning. So in conclusion when you have a house with bad foundations it will

crumble, You need to either rebuild or spend lots of money on a renovation that is not guaranteed to work. One way to fix these sort of issues that EU is facing is to either devalue the Euro or Greece to be removed out of the Euro but still have a say part of the union, either way with the second bail out it looks like Greece will not be removed from the EU after all and fundamentally we will see in the near future a massive devaluation of the Euro currency crosses.