On the other hand - an Unbalanced Economy - Monetary Policy vs Finance vs Economy


In order to better understand this example, please note that in the drawing, Money is seen as Water... in his various forms ...

In the atmosphere, our air ▼ has the following composition, and, Water has the following ▼...



...So, as presented above and as we all know, water (1 part of Oxygen and 2 parts of Hydrogen) travels throughout the air that we breathe.

Because every center in these presented economies, mentioned in the Drawing:
1) ■ Government;
2) Supply side of the economy, ■ producers ■ service providers and ■ manufacturers
3) Demand side of the economy,■ Consumers, both private and public

...are leaking or loosing money towards the world markets, and because these economies are not self sufficient, mainly because they lack sufficient resources to produce the Energy that they need to support their activities, and, because they rely heavily on their imports, in order to provide for a significant part of their consumption, they are running tremendous amounts of debt, and, at the same time they are worsening their economic situation, because they have engaged / entered into the Reversed Sustainability effect.

The problems of these economies are old, and they are anchored mainly in: Bad management, Deficit building, Debt growing, lack of investment in machinery, software and hardware (gross fixed capital - GFCF) , low professional (technical) formation, excessive consumption, unsupported and unsustainable government investments and the absence of real and effective government / state reforms. These situations can only be solved if they are faced head on, dully explained, based on well designed and well elaborated programs supported by the country's / nation populations.

Please note the following:

Although in the drawing are identified several EU country's, the crisis, in the presented EU countries have different sources and approaches:

Portugal ► mainly long lasting, government budget deficit, for the past 30 years, and specially during 2008-2011, tremendous amounts of debt accumulated during the past 10 years, mainly due to support state infrastructures that had no sustainability considering the countries ability to repay them, and, a trade deficit accumulated every year since the 1980's.

Ireland ► Housing bubble, and, Banking crises due to excessive exposure to risky assets.

Greece ► Budget deficite (gov), High government debt and external debt, lack of statistical credibility and accounting problems

Cyprus ► the shortage of capital and liquidity, caused mainly because of the 2007-2008 collapse of the financial markets, derailed the Cyprus banking sector, that has a major role in the economy. The country's debt and their over dependency from deposits made by foreigners during the 2007/8 crises (fresh money), froze the ability of the country's banking sector to continue to support the country's government debt. Alongside with a fragile economy that rely mainly on Tourism and the banking sector, led to several downgrades, and to the following call for help, first to an emergency loan from the Russian Federation, in early 2012, followed by the bailout from the EU in 2013.

Italy ► Mainly high government debt and budget deficits

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