Europe Most Lacking is Confidence Not Money

Ireland was finally saved. But realistically speaking, this is actually not really "news", even say that, from the beginning, this is a certainty.After all, in the present circumstances, the euro area will not allow any one member governments "bankruptcy", as that would other euro-zone countries, the euro's status as an international reserve currency, European economic integration as well as the impact and bring about unpredictable damage.
However, the EU Commission, the European Central Bank and the frustration of many euro area member governments is that the debt crisis began in Greece, the euro zone is not confined to Greece, and even probably will not end in Ireland to receive 85 billion euros in Dublin "lifeline", the international bond market investors have questioned sights on Portugal, Spain and even Belgium, Italy.
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If careful analysis of all euro area countries, except Germany, all other countries, there is more or less sovereign credit risk, either government "spendthrift", either the banking crisis, weak economic growth either, either Unemployment is high ...... for Portugal, Spain, Belgium, Italy is even while facing one of the above as well as a variety of risks. If the international bond market investors tortured one by one go down followed by Greece, Ireland, the Irish will have after the fall of Portugal, Spain, and so a chain down to the last, the euro area are likely to fall into a "beyond redemption" of the sovereign debt crisis.
At this moment, Europe's policy makers must torture themselves: their response to the crisis in the end what's the problem?
Greece and Ireland have been from the lessons of view, the international bond market investors, no doubt, they see the EU Joint International Monetary Fund, have the ability to aid Greece and the ability to help the Irish, they can even help Portugal and Spain, however, if all euro area Member States into crisis, the European Union have the ability to help the euro?
In the international financial crisis, Chinese leaders put forward a wisdom: faith is more important than gold and money! For the euro zone sovereign debt crisis, this statement applies. If the international bond market investors to reduce the budget deficit for the euro-zone countries, to regain the competitiveness of the economy, reduce unemployment, the work of repairing the financial system, and so have confidence in the euro zone sovereign debt crisis even down to Greece, it will probably only in Ireland; the other hand, if the international bond market investors that the euro area member states will eventually escape the "debt restructuring" - that is "disguised bankruptcy" fate, then Greece and Ireland, there will be more euro countries fall. Moreover, these countries will show the process down a high degree of similarity: investors to question the solvency of a euro zone member governments, the country's bond yields rise, bond for the "credit default swaps" (CDS) prices higher, leading to the soaring cost of government financing until it was abandoned by investors in the bond market, leaving only the end the only way to accept external assistance.
In other words, one by one into a crisis in the euro zone rescue member governments, but can temporarily ease the crisis, but it can not fundamentally eliminate the crisis. So, the debt crisis for the euro area, "root" Where is the move?
First, the EU member states, notably Germany and France, the two leaders, must be a solemn promise to all investors, they will not allow any member of a euro-zone government "bankrupt", this guarantee seems to produce so-called "moral hazard", but the fire must bear the critical moment, if the so-called "moral hazard" tied hands and feet, poor response will only exacerbate the risk of fire, the loss even more devastating.
Secondly, the EU Member States must convince investors that they have sufficient means to cope with the current crisis. Of course, in the long run, the debt crisis of the euro area member countries is the fundamental way of economic structural reform, enhance competitiveness, while serious fiscal discipline, to prevent some members of the government extravagance, fraud. But such work is impossible not to see the effectiveness of three to five years, for many euro area member governments, it is likely to have less than three to five years after the boil.
Therefore, the EU member states must come up with short-term measures can be effective. 750 billion euros of EU crisis stabilization mechanism is very important, is being discussed will be the permanent crisis of 2013, effective stabilization mechanism is also very important, but more effective, more direct approach is hidden in the hands of the European Central Bank. European Central Bank printing money directly for the purchase of Member States treasury bonds, or even other financial assets.
Operation of modern economic and financial system is the foundation of credit, lack of confidence in the international bond market investors, allowing any one of the euro area member governments into "bankruptcy." From this perspective, confidence, and not money, is the lack of Europe's most valuable assets.