After a landslide victory in Sunday's election, Spain's Popular Party faced a small defeat on the following day as 10-yr Spanish government bond yields rose to just below 7%.
It seems the EuroZone's debt storm has set off a chain of changes in governments of Italy, Greece, Portugal, Ireland and now Spain, reflecting widespread hopes a new face in the political spectrum will help restore market confidence and lead the countries out of the current crisis.
However, an economic analyst from the Chinese Academy of Social Sciences says the EuroZone's fiscal problems are a systemic issue that cannot be solved by replacing political figures, and European leaders should exert more efforts in various fields to end the financial worries.
Xiong Hou said the newly sworn-in Greek and Italian leaders were typical technocrats, whose inaugurations were largely a transitional process to meet external requirements and raise the market's confidence.
Italian Prime Minister Mario Monti and his Greek counterpart, Lucas Papademos, are, in particular, tasked with rescue missions at very critical junctures. Voters have high hopes that the 2 technocrats can help their economies survive and thrive.
On the other hand, European leaders were already aware amid the growing crisis that they need to do more than stabilize markets and offer assistance, Xiong added.
The volatile market reflects two sources of uncertainty that are holding back the EuroZone's progress. The 1st centers on the continuity and consistency of reform policies introduced by governments with term limits.
As was the consensus reached at the most recent EU summit, a credible rescue should start with growth. Therefore, massive reform is necessary to help the flagging economies ride out the current crisis and that reform will require a decade-long endeavor.
Just as European Commission President Jose Manuel Barroso rightly described the current crisis, this is a marathon, not a sprint.
The average terms of government in these countries are far shorter than the time needed to implement such a major reform program, creating uncertainty about whether the reforms would survive a change of government.
Xiong comes to a similar conclusion, but from a different angle, saying fiscal, economic and even political integration in Europe cannot be fulfilled in the short term due to the complicated legislation system within the EU and contradictions among its member states.
The 2nd source of uncertainty surrounds whether European policymakers can find the will to act fast in the interests of the Continent rather than enlist voters' approval. Europe's leaders have long been criticized for their slow response to this crisis.
One of the major reasons behind their inadequate responses to date is that governments, looking for stronger mandates, are reluctant to threaten their popularity with voters.
It is the same in Spain, where the Popular Party, for fear of a serious erosion of political support, has promised not to cut pensions.
For voters, seeking change amid crisis is understandable. But what will really make a difference is urgent action on a huge scale, instead of a speedy handover of power.
Paul A. Ebeling, Jnr.
Paul A. Ebeling, Jnr
Paul A. Ebeling, Jnr. writes and publishes The Red Roadmaster's Technical Report on the US Major Market Indices, a weekly, highly-regarded financial market letter, read by opinion makers, business leaders and organizations around the world.
Paul A. Ebeling, Jnr has studied the global financial and stock markets since 1984, following a successful business career that included investment banking, and market and business analysis. He is a specialist in equities/commodities, and an accomplished chart reader who advises technicians with regard to Major Indices Resistance/Support Levels.