Consequently, the EU leaders have called the initiative of drawing up a joint plan as a recovery of this incumbent period. The European Central Bank has also injected billions of money into the system to entice purchasing power and give a guarantee to bank depositors. But the situation remains confound. The EU also pressed for more regulation and stricter accountability and transparency, to strengthen the financial sector through more supervision, proposing the formalisation of this under a directive. But conversely to the US, the EU is characterized by a heterogeneous economy, thus, this crisis is exerting different pressures on EU member states – 27 economies require varied measure to curb malignant effects and prosper economic growth.
Conversely, the USA has a much less structured regulatory framework compared to the EU. Moreover, the collapse of the Dollar is looming, as has been also cited during the G20 summit held on 2 April in London. In the last decades, too many dollars have been issued by the Fed (semi-privately owned), and government has no control on M3. Such subside should have occurred much earlier since devaluation dates back to the 1970s. But, the global GDP keeps on securing the US Dollar, while people still believe in its value and maintain their purchasing power. Up to now, the excess in US Dollar has always been engaged in some market, such as the automotive, housing, venturing in the Middle East which pushed oil prices to an exorbitant level, as well as terror wars. Subsequently, the Fed issued another 1.2 trillion US Dollars this March to give a boost to the economy.
Worldwide action is surely needed as measures only in EU or America would be simply futile, given that we are living in a globalisation era.
On a broad-spectrum the focus must be shift to emerging economies, which have not been affected badly. More investment should be allocated, so as to promote the creation of jobs. In fact, the EU, being home for over 23 million SMEs, is putting a lot of effort to reduce bureaucracy which puts burdens inversely proportional to the size of SMEs. In addition, with all the obligations to our abused environment, the greening of jobs is essential while at the same time resourceful in these times of crisis for further job creation.
But worldwide action is surely needed as measures only in EU or America would be simply futile, given that we are living in a globalisation era. While the Obama administration believes that protectionism could take us back to the great depression, the Maltese government is injecting huge investments in manufacturing companies to safeguard employment. Fortunately enough, Malta was not as harshly hit like other EU member states, at least so far! This is also thanks to the banking system which remains highly conservative in fractional banking reserves. Besides, the Central Bank of Malta has forecasted a GDP growth up to 1.1% for this year. Indisputably Malta will sense the crisis effects in the coming years, being a country highly dependent on tourism especially British. This could be overcome, by focusing on tourism niches and investment in sustainable tourism as is already in the pipeline with 10 million Euros secured from Structural funds for this purposes.
Coming to a close, a gloomy perspective will only result in the endurance of a recession. This will keep on slugging the economic cycle, giving room to pessimistic speculation, and a curb in spending patterns to put aside for the rainy days being conjectured. A combination of EU’s management with a high degree of US Presidency’s positivism which brought around a confidence for a better future in American’s mindset, are essential for a way forward to a more rapid economic upturn.
Therefore, in these times of challenges, all countries must do a joint effort to resolve the issue, putting in practice the ultimate message conveyed in the last EU-USA summit stating ‘We start from the belief that prosperity is indivisible; that growth, to be sustained, has to be shared.’
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