Most of us may have been informed of many aspects regarding the Euro zone's debt crisis and particularly of the risk that the EU members run of getting caught in a vicious cycle of instability, which would definitely cause disastrous effects on the financial system, not only in Europe but also in the rest of the world. But not many of us are aware of the reasons for which the European debt crisis should end with less possible negative effects.
There is no other choice ahead for European leaders except that of supporting the euro's currency survival by making radical decisions in terms of proving that at any given moment they respect the Europe's cornerstone: the prosperity and the solidarity among all European countries. After a long time of European political confusion, indecision and the inability of dealing with the problem of guarantees expected by the international markets, right now it has become common sense that the debt crisis does not concern only the European countries, but also the whole of Euro zone's members.
What's occurring in the European continent, should not be -- and is not -- isolated by what Americans set as their priority, namely, good prospects for their economy, creation of more job opportunities, increased exportation and greater competitiveness for the American products. The truth is that none of these economic targets can be met while the Euro zone's countries are struggling against the financial markets' intimidation, the even higher interest rates and the constant danger of an extending and persistent degradation for their high indebted economies.
While the European economy continues to remain under the cloud of uncertainty and insecurity for its future, the global economy, the major player of which is still the United States, is under the threat of being affected by the colossal spillovers reflected in terms of the micro and macro-economic level. Of course, American President Barack Obama is fully aware of the interconnectedness between the Euro zone's debt market and his presidency's goal of recovering American economy. At this point it needs to be highlighted that thanks to his intensive pressure towards the German Chancellor Angela Merkel in order that she soften her rigorous stance during the inner-European negotiations, the Euro zone's political leaders agreed on a temporary support mechanism for Greece and, lately, for Ireland.
The exceptional role of International Monetary Fund (IMF), lending billions of dollars through that mechanism, is not disengaged from the European political reactions. There is no doubt that the US economy would only lose by just standing as a passive spectator of the Euro zone's economic collapse, while it would only gain a lot by supporting the debt-ridden European countries.
Given that context, the intervention of IMF into the current rescue mechanism -- developed and put into practice for the first time in case of Greece -- strengthens the conviction according to which the overcome of Euro zone's crisis will be a victory for the US as well. By being the largest funder among many other countries in the IMF's executive office, the US is becoming a kind of guarantor for the Euro zone stability. Money given through the IMF' bailout to Greece, Ireland and probably to Portugal sooner or later is a lifeguard for those economies and, extensively, for the overall global system's balances. However, through the IMF bailout, the US is extending its financial alongside with its political influence on the Euro zone.
With China having demonstrated its intention to buy European bonds, it is clear the Euro zone is being transformed into an area, where each one of these two world's economic leaders are trying to obtain much more financial, but mainly political impact. While China's Euro zone bond holdings are limited, the US through the IMF is enhancing its role as the principal financial partner to the Euro zone. The IMF has not apparently the authorization to participate into the oncoming new context of financial governance in the Euro zone, but certainly it has already established its distinctive role of participating in the European crisis resolution management for now and the near future.
European leaders constructed more than ten years ago the vision of a common currency among its members, but they didn't develop the appropriate mechanism for a solid not only monetary but also fiscal environment. Reacting to some Republicans statements, like those of House Republican Caucus vice Chairwoman Cathy McMorris Rodgers and House GOP Caucus Chairman Mike Pence, I need to express my surprise of how easily politics create false impressions. Of course, the case of debt-ridden Greece is not an example of a reliable economic management. But in that case, the problem was not only Greek. The crisis -- as we see today -- is concerning the total of the Euro zone and so the overall financial system.
Some American politicians by supporting the argument that US citizens cannot pay through the IMF's bailout for the Greek debt or the Euro zone's crisis, tend to oversimplify the reality. American citizens are not responsible for saving neither Greece nor Ireland or any other state of the Euro zone. But, it is in the American interest that the European countries overcome their economic difficulties, before the spread of economic contagion across the Atlantic Ocean. Hopefully, American President Obama confirms what Henry Kissinger had said that during a crisis making a bold choice and decision is often the safest way. No doubt that the current crisis requires such strong choices and decisions.
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