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Business Daily: Are Europe's politicians too polite?

12/07/2011

Are Europe's politicians too polite?

BBC World Service - Business Daily, Are Europe's politicians too polite?

The real defect that led to Europe's debt crisis: politeness

An insight into the defect that led to Europe's smouldering debt crisis - are Europe's politicians just too polite? And, why the real story of China's transformation is so hard to report.

For 18 months now, Europe has been struggling to contain its smouldering debt crisis. Like firefighters, the region's finance ministers damp down the flames in one area, only for them to flare up in another place.  

Italy is the latest country to be caught in the conflagration.  The cost of borrowing has soared and stock markets have plunged on fears that the country's tough-minded finance minister may have to stand down after being implicated in a corruption scandal.  

Italy's involvement takes Europe's debt crisis into another dimension.  It is the eurozone's third largest economy and has 1.8 trillion euros of debt outstanding - a quarter of the entire European total.  In terms of debt to GDP its debt burden is second only to Greece.  

Of course if Italy needs a bailout it's obvious where most of the cash is going to have to come from.  The BBC's Berlin correspondent, Stephen Evans, reports on the vigorous debate in Germany about how to respond to the developing crisis.

A key part of any reform of the European Union must involve working out how Europe managed to rack up such vast debts in the first place.  

With Greece the answer is straightforward.  The Greek government disguised its true level of debt, enabling it to run public deficits way above what the official figures showed.  

Mario Monti is the former EU competition commissioner and is now the president of Bocconi University in Milan.  He says Greece would never have been able to borrow so much had the European statistics office had the power to check how reliable nationally produced statistics were.  

Years ago the European Commission proposed it should have just such powers but the move was blocked by member states led by France and - yes - Germany.  

Mr Monti tells Justin Rowlatt this is one clear example of the two, rather surprising, forces which he believes have undermined the European project - unhealthy politeness and excessive deference to the big economies.

Plus, economic data is part of the basic currency of this programme.  Every day we quote the latest GDP or inflation figures for whatever countries we are talking about.  But how much do these figures actually tell us about how ordinary people's lives are changing?  

Data is even less revealing in a vast country like China which is undergoing massive change says the BBC's correspondent in Shanghai Chris Hogg, who's ending his posting after three years in China.  

In his last dispatch for the BBC Chris reflects on the difficulties of reporting on how the world's second largest economy is changing.

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