“If a tree falls in a forest and no one is around to hear it, does it make a sound?” – By Saeed Al MuntafiqExecutive Coaching, Expert Opinion, Featured, Leadership, National Thursday, July 12th, 2012
“If a tree falls in a forest and no one is around to hear it, does it make a sound?”
This is a philosophical thought that raises questions about observation and knowledge of reality.
Can something exist without being perceived? Can we assume the unobserved world functions the same as the observed world? What is the difference between what something is, and how it appears?
Two monks were arguing about the temple flag waving in the wind. One said, “The flag moves.” The other said, “The wind moves.” They argued back and forth but could not agree. The Sixth Ancestor said, “Gentlemen! It is not the wind that moves; it is not the flag that moves; it is your mind that moves.” The two monks were struck with awe.”
This is how I see the story of Eurozone panning out. Globalization which was such a big buzzword not too long ago, is now a buzzword of a different sort. The carrions are buzzing and what we see happening in Greece may well be the start of the flag waving.
Perhaps what people are seeing are isolated incidents. Perhaps no one is stepping back and no one is noticing the bigger picture that is painted in grey.
I am sure you will have realized how the nations of the world have become increasingly interconnected? Think about it. At the supermarket you can buy products from all over the earth—oranges from South Africa, olive oil from Greece, wine from Italy. You buy clothes made in Indonesia, Sri Lanka, or Malaysia. In the evening you turn on your Korean made television set to watch your favourite program. Every day you drive your American, Japanese, South Korean or German-made car to work. Call customer service to discuss your telephone bill and you may well be speaking to someone in India. If you live in a big city, you have likely encountered people who have immigrated to your country. Surfing the Internet on your computer, you can keep up to date with news anywhere in the world, 24 hours a day, 7 days a week.
Then there are those believed integration was the first step toward a “new world order,” one in which sovereign nation states will be dissolved in favour of large trading blocs led by a super world government.
Globalization is not new. Historically, people have left their surroundings and travelled to distant lands for four main reasons: conquest (the desire to control other countries); prosperity (the search for a better life); exploration (the desire to discover new lands); and trade (the desire to sell goods profitably). The primary agents of globalization in the past were soldiers, sailors, traders and explorers.
Finance ministers from top industrialised nations seek swift solution amid fears euro crisis will derail global economy.
Fears over Spanish banking sector prompt finance chiefs from the G7 to hold a teleconference call for noon BST, as Europe edges closer to agreeing banking union across the Eurozone.
It’s official – Ireland has voted in favour of the EU fiscal treaty, by 60.3% to 39.7%
Ireland’s affirmation of the treaty is not a vote for austerity, but a call for a joint European growth strategy.
Britain could be asked to underwrite up to €6bn (£4.8bn) towards a bailout of Greece if the country exits the Euro , according to a think-tank report released on Monday.
David Cameron may also face calls for concessions including a referendum on EU membership if a Greek exit prompts full treaty change, a report by Open Europe said.
There are growing concerns about the consequences should Athens leave the euro in a so-called “Grexit”, which have escalated in the run up to the Greek general election on 17 June.
The only way the current crisis in the Eurozone will be resolved quickly is if the European Central Bank (ECB) decides to print as much money as it takes to drive down bond yields across the region.
To be clear, I’m not saying that’s a miracle solution. Money-printing won’t change the fact that the Eurozone doesn’t work. The member countries are too different. All ECB printing would do is to buy time to find a ‘correct’ size for the Eurozone.
So in an ideal world, Europe would then go through the long and difficult process of discovering which countries’ voters were comfortable with being part of a United States of Europe (Greater Franco-Germania, effectively). That would entail common tax law and common bond issuance among other things. In other words, for the Eurozone to work, countries would have to be willing to give up their sovereignty.
Those who didn’t want to, or who couldn’t cope with the entry requirements, would have to be provided with an exit route from the Eurozone. By easing the passage with printed money, it wouldn’t have to be a complete catastrophe.
It would be the honest, upfront way to do things. Having been through a financial crisis, everyone would now understand what they were signing up for.
But of course, that’s not going to happen. And it certainly isn’t what happened on Friday.
Instead, all Europe did was to say that in future they will be much stricter with countries who break the rules. How they will enforce these rules isn’t quite clear. The idea of trying to fine Greece for getting into too much debt is absurd.
Meanwhile, European banks are going to have to raise huge amounts of capital, at a time when they are going to be competing with their own countries in the markets.
That points to a massive credit crunch in Europe. In short, banks in the region will have difficulty raising funds. If banks can’t raise more money to support the quantity of loans they have outstanding, then they need to shrink their balance sheets.
That means – as James Ferguson regularly points out in the pages of a magazine that they’ll need to shrink the amount of lending they do to the likes of you and me: The best ways to play Europe’s banking crisis.
That’s bad news for European consumers and companies. Modern economies run on credit. So when the conduit of credit – the banking system – breaks down, it’s crippling for an economy.
And despite Britain’s decision to stay out of this latest treaty, we’re not immune to it either. Our banks are arguably in a better state than Europe’s but we’re certainly not home and dry.
The tree has fallen, are we listening? And if we are, what will we do so that we can