Nearly two years ago we wrote an article entitled «Economy and Politics«The video showed various videos of trade union leaders and economists. Obviously their speeches were and are not only opposites, but they actually spoke different languages. They are in fact different animals. Their divergences become even more evident and lethal when the situation of the global economy and finance deteriorates, i.e. when their rapport and harmony is most needed. But they do not. The greater the systemic risk, economic deterioration and global complexity, the more governments need to act expeditiously, the more inoperative their policy decisions become. And markets need deeds and not words in these delicate times, firm and courageous action. However, politicians can only offer, as we are currently seeing, empty words, good intentions and populist decisions that keep them in power, inoperative but power nonetheless.
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Haven’t you ever wondered why sovereign debt in the European periphery is under greater strain and why its risk premium is rising faster than that of countries that are just as indebted – or even more so – such as Japan or the US? Why is there so much speculation surrounding the sovereign debt of the PIIGS? Why are these PIIGS economies hurtling towards default or inevitable restructuring, whilst other heavily indebted countries manage to keep the risk premium demanded by the markets at bay?
A couple of weeks ago, Alberto Artero from Cotizalia wrote