It is widely known that the eurozone members cannot print the currency. But in retrospective, they did just that when they issued debt without regard for the consequences.
And that may explain why José Manuel Durão Barroso, president of the European Commission, is against a fiscal union, according to SIC, a Portuguese TV station. In short, he stated that the union (translated) “already has had an economic government for a long time. The European Commission.” Amazing, and talk about defending your job.
But the current experience is not a simple reflection of the global economic crisis that has plagued most everyone, but rather a side effect of a disease that has been in place for a very long time. During good times the issue wasn't pressing and hardly visible unless one was looking, and to simplify the ongoing problems as a Greek problem completely misses the point.
Unless you’re part of the fabric, sometimes it’s hard to understand exactly what goes on behind the scenes. Sol, a Portuguese online publication, provided an example of how government owned transportation companies dispense outrageous benefits, and rightly points out that – and I’ll translate - “there are situations that are immoral, and have been accumulating over the years.”
Soflusa, a ferry company operating on the Tagus river, gives away over 100,000 trips per year. This company is the end result of the nationalization of five private companies that took place in 1975. The sons and daughters of the 7,000 employees of TAP, a Portuguese airline, fly free as long as they are 25 years of age and younger. At Carris, the bus company, it’s beneficial to claim disability because employees receive their salary in full.
The reform that I refer to often is not only political and economic, but cultural as well, and this mentality of entitlement that has been fostered for many years, and the view that government must provide without even asking where the money is coming from, must change. And if one thinks that Portugal is unique, think again.
I was watching the Amanda Knox verdict and observing the surroundings in the picturesque town of Perugia. Aside from the legal aspects and news value, the one thing that potentially went by unnoticed was the way the defendant was escorted into the courtroom, from an economic perspective, that is. I counted five police officers, and 60% of them were simply walking behind the other 40% and doing absolutely nothing. It's not as if she was going to make a run for it. But in their defense, the five officers is viewed as normal because they have been conditioned without realizing it.
Thus if someone out there continues to view the European model as the one to follow, make sure that the homework is completed. Unless it’s driven by a power grab, in which case I understand it.
Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.