V-E DAY and the future of Europe

Two things happened in the last couple of days in Europe. One the crisis in Greece deepened to an extent that EU was force to act, otherwise the monetary union would be in severe danger. So far, the structural reform is not clear yet, but the trillion euro plan stabilized world market today. This number, ten times bigger than the original rescue plan to cover Greece, finally put a stop on the dominion effect of the debt problem in Europe, but in the long term, inflation fear will come back for sure. The world financial is like a leaking dam for sometime now, in which investors are looking for any sign of a crack, and since all markets are linked today, one crack is threatening the whole. G20 seemed to be incompetent to fix the world financial system and it is rightly so. It is a big basket of countries in different stage of development and capacity, no consistent rule could apply to them all. However, at least it seems that in Europe enough political will now accumulated out of this crisis to do something to preserve the union instead of crashing it.

Another sign of hope came from the V-E Day parade in Moscow. For the very first time, Polish, French, British and American troops are all reviewed in the Red Square, unimaginable during the Soviet times, or even a couple of years ago. So the airplane accident which buried the Polish leaders may actually open a new era in Europe. Of course, German chancellor showed up in RS first time in history as well. Consider that She can speak with Putin in both German and Russian, it's extraordinary how European Europe has become. This show of solidarity of Europe further reduces possibilities of conflict in Europe, which in turn provides a good support for the euro. The sinking of euro will also boost EU economies in the short run.

All in all, EU and US may have a lot to worry about, but the fundamental global structure is still working for them. It is East Asia that perhaps more vulnerable than we thought. Indeed, EA piled up a lot of reserves, but without open world trade system and export advantages, fragile geopolitical situations in Asia may prove to be more troublesome than many believed. In time of crisis, Asia may suffer the most at last...