After nearly plunging the world into the deepest recession it has ever seen, in a matter of a week the leaders of two European nations have resigned. The reason, they can no longer handle the economic issues in their countries that are spiraling out of control.
Greek Prime Minister George Papandreou was the first to step down and only a few days later Prime Minister Silvio Berlusconi handed in his resignation. Both men are probably halfway to a beach destination to drown their sorrows in drinks with fancy umbrellas. With so much extra time, I’m sure Berlusconi’s bunga- bunga parties will be in high gear.
But in the meantime, this is what the two men have left behind.
Two countries with unsustainable debt levels, years of government over spending and continued pressure by the European Union to impose even stricter austerity measures to shore up countries debt problems. In both countries borrowing costs have risen to record levels as investors fear the two nations will be unable to pay their debts.
It’s no easy task for the new leaders of Italy and Greece.
So who are these guys?
The New Greek Prime Minister Lucas Papademos is a hard-nosed economist and former vice president of the European Central Bank, in my opinion exactly what the country needs, a man who really understands economics. By all accounts he has an immaculate reputation, and already has the support of Greece’s political heavyweights.
The new Italian Prime Minister is Mario Monti. He’s the former EU competition commissioner and also an economist. He is well known to be anti- Berlusconi. Dubbed “Super Mario,” he’s already formed a new government filled with ministers with backgrounds in finance, law and academia and few politicians.
Sounds good to me. It’s a stark contrast to the former flamboyant leader, who was as close as you could get to a dictator in a democratic country. Monti’s reserved nature is breath of fresh air.
But can these two economists save the European Union?
I think they can. Both men are due to table new austerity programs that will outline how the two countries plan to get their fiscal houses in order. Papademos also recognizes how important it is for Greece to stay in the Euro Zone. He wants to start by reducing the Greek debt burden by $100 million Euros and working with the EU partners to stabilize the market jitters.
Monti has a bigger job, as he is the leader of the second largest economy in the EU, an Italian default would be much worse than a Greek default. The affects would be widespread and not contained just to Europe.
So the new leaders give me hope that there is progress in the European debt crisis. The world is still heading towards a recession because it took to long and too much money to make these changes in leadership. But the future is brighter and in many cases much more clear I am trying to optimistic by saying the world is still heading into choppy waters but this shift in power gives me hope that we are better equipped to navigate our way to safety with these two men at the helm.
For Papandreou and Berlusconi I wish you both the best. But as you lie on the beach enjoying your fancy drinks may the choppy waters ruin your afternoon seaside naps.