Should the Crisis last?

Although I have yet to see any decisive action from politicians and policymakers in the EU I have the notion that from 2013 the situation will be better for the Union. I base this on the current actions by private banks, which are either selling their non-core loans or trading their existing loan portfolio in a country, in order to deleverage themselves (for details read this). I would assume that banks, tired of waiting for the officials to act, have decided to take action into their own hands. 

What worries me more than overcoming the crisis, is overcoming it without the opportunity to learn something from it. If the crisis terminates and we have the banks to thank, what would politicians and policymakers have done about it? Practically nothing. At the same time nothing will be done to safeguard the Union's future, as no extra authority will be given neither to the ECB nor the European Council. If the same causes provoke another crisis in the future nothing will be able to halt it at its beginning, since no measures have been taken now.

If the crisis ends without any political (or government) intervention then politicians will understand that they need to do almost nothing to correct the situation: procrastination, austerity measures and maybe a stimulus package will be more than enough. It would also mean that Southern Countries, with their productivity to the low end of the EU average will have done nothing to correct the situation. Cyprus, Portugal and Italy will continue to see their people work more than everyone else, alas, with lower productivity. You may notice that I exclude Greece from this. In my opinion Greece will be the nation which will mostly benefit from this situation. It is the only nation which has been through the process of reorganizing its finances, cutting excessive spending and making reforms and structural changes in its economy. Although the speed of this process is not one which would allow it to witness less contraction and unemployment, the process itself will be beneficial for the nation, something which will be more visible in the next 5 years. Nevertheless, had the process been slower the negative effects would have been less now, with the positive ones still occurring. (this scenario is of course based on the assumption that Greece will be given the extra €2.5 billion it will need this year, and will remain both within the Union and the Eurozone, which it should!)

On the other hand, Cyprus, Portugal and Italy have done little yet to correct this situation. Although all countries have undertaken measures to reduce their fiscal deficit (which is good if they are aimed at reducing irrational expenses), I have not yet seen one take any measures to increase productivity. What we so far witness is tax increases, salary cuts and reductions in pensions. All of which are mainly aimed at the older population!

As for the youth? It seems that no country has so far taken any action towards reducing youth unemployment or implementing incentives to increase start-up creation.  Have a look at youth unemployment in the EU (source: Eurostat)

Both the EU-17 and the EU-27 youth unemployment are over 22%! And nothing is yet to be done about this situation. I am guessing that until a change of mind occurs to the heads of politicians and policymakers, no change will occur in the EU. Well, I hope that the crisis lasts enough for them to make that change.