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Finland Is Eurozone's Crisis Country in All But Name

"A moment of realization is worth a thousand prayers", said movie character Mickey Knox in Oliver Stone's marvellous love story named Natural Born Killers. It seems that Finland has finally awoken from her slumber after all these years. But one more thing is necessary, still. We (Finnish people and government) need to admit this reality.

Because, if we do not we are disproving the fact that core countries need to inflate wages in order to help searching for the balance between all countries across the Eurozone. The list of institutions and individuals screaming for Germany to allow this massive wage inflation to happen is nearly infinite, but to name one I'd be happy to mention the IMF. And Germany is one of those "core countries".

But Finnish government is hinting otherwise. Treasury Minister Jutta Urpilainen told last spring that the recovery is behind the corner. It's an extremely familiar story. The recovery has always been so close that we can almost touch it, a year after another. However, all of a sudden she appeared before the tv-cameras holding few stun grenades and lashed out them all. She mentioned that there will be "painful solutions that concerns us all". Scary, isn't it?

Those who have been blessed with even a tiny drop of awareness knew beforehand that this outcome was only waiting to happen. Some say that this is just another PR trick to draw media attention. I'm not arguing that this didn't happen. The reality has always been lurking out there. It has been reachable for all those who care. It was only a month back when I wrote about our dire situation (only in Finnish, sorry). I could make a short briefing of it.

First of all, our trade balance. Finnish Customs told that in May trade balance has finally turned into black. What was really behind the story was that imports nosedived staggering 10 pc (this accelerated in June to 12 pc). However, exports in May went through the floor as well declining as much as 6 pc (same pace in June). All these figures are y-o-y.

The very next day after May's trade balance figures Statistics Finland told that the output of national economy is heading south, 4.2 pc y-o-y to be more precise. And on the third day of that week Statistics Finland told Finland's industrial output was sinking, as well. Pace was shattering 5.9 pc. Later on that week it was revealed that our GDP didn't take a slow declining of 0.2 pc on the year 2012, but 0.8 pc. New orders in manufacturing fell 8.6 pc, promising for a grim future, as well.

So, what to expect? Some first glimpses into the proposal of the budget for the year 2014 tells it will be tough. Not only to citizens, but also for municipalities in Finland. It looks like the government of Finland is determined to make another attempt to find different outcomes of "let's do austerity in the middle of recession", just as the Greece did.

But, isn't it so that there is no alternative? Well, it seems like Finland can't let the public debt to soar. It's still beyond the government's imagination to seek a national, freely floating currency instead of Euro. But I keep my optimism up: they will realise it and hopefully rather sooner.

It's even worth praying. A thousand times. Even while lacking traditional spirituality.

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10 käyttäjää suosittelee tätä kirjoitusta. - Näytä suosittelijat

NäytäPiilota kommentit (13 kommenttia)

Käyttäjän ilarikiema kuva
Ilari Kiema

The Declaration is misleading – today Finland is indeed an industrial crisis country, due to the strategic choices and visions of globalization based on the unique Nokia experience. Finland is probably a budget and public expenditure crises country, but this does not qualify Finland as “Eurozone's Crisis Country”.

Mr Myllyniemi writes himself, ”Well, it seems like Finland can't let the public debt to soar”. Well, then Finland cannot be properly called “Eurozone's Crisis Country”. Finland does not meet the criteria to be one. On the contrary, Finland still meets Eurozone’s criteria for debt and deficit.

Mr Myllyniemi would prefer “freely floating currency instead Euro” for Finland and for Finland only and alone. But then, however, the state and municipalities would not be able to take care of their debts in other currencies already accumulated. If the present Eurozone is not working concept, - as I believe it is not because it would require Eurobonds, which are, however not possible because of constitutional reasons – then a better alternative for Finland would be to form a smaller currency zone with Germany, Austria and Netherlands: Persuzone (Priority European Regional Stability Unit).

Persuzone would provide the needed stability both for public economy and industry.

Käyttäjän susijumala kuva
Henri Alakylä

The declaration was based on simply observing the reaction of our government and labour market participants. Should we claim rightfully the status of being core country or examplary model student we ought to rise wages. With this increased purchasing power we then fill the order books of EZ-countries that has been hit badly of this crisis. We could also increase public spending a lot.

But for some strange reason the opposite is taking foothold. The reaction is similiar to the other peripherial countries that has been struck by the crisis. Thus, I made the obvious conclusion that Finland is one of these problematic countries.

Finnish government debt is mainly sold under the law of Finland. Meaning that the paid-back currency is defined by the Members of our Parliament. Under the Euro we are at the risk of being insolvent. Internal devaluation won't do any other outcomes but defaults, either. Especially domestic debt by the households (exceeding already 100 pc of yearly income) and companies are very sensitive to start this debt-deflationary spiral, while fiscal multiplier is above one.

The suggestion of having solely "strong" countries within the currency union would mean that the currency would be even more overvalued than the present Euro is for Finland.

Käyttäjän henry kuva
Henry Björklid

Hullu uutismies elokuvassa "Network":
"I'm mad as hell!:"


Käyttäjän TapaniPollari kuva
Tapani Pollari

Hyvä Henri.

Samma på pakkoruossi, va kostar kytkinasetelma? :)

Käyttäjän kariilkkala kuva
Kari Ilkkala


tuota, ööö, kenelle tämä pläjäys on suunnattu?

Puhutko nyt Puheenvuoron lukijoille yleensä, vai Perussuomalaisten puoluejohdolle? Älä huoli Henri, en minäkään tiedä kuinka meidän meppiehdokkaaksi pääsee. Kansainvälistä yleisöä et tällä palstalla tavoita.

Kyllä täällä kielitaitoisia piisaa, vaan ketä se hyödyttää jos alamme vieraskieliseen kilpalaulantaan? Kohta enkun lisäksi lentää saksaa, ranskaa, italiaa, espanjaa, venättä, retoromaniaa, esperantoa... mutta ei missään tapauksessa pakkoruotsia :)

Kansainvälisten talousjulkaisujen verkkoversioissa voi kouluttaa eurooppalaisia ja muita Suomen oloista sen kun kyljistä lähtee.

Käyttäjän susijumala kuva
Henri Alakylä

Suunnattu lukijoille. Myös niille, jotka eivät päädy lukemaan Puheenvuoroa siitä syystä, ettei ymmärrä kieltä. Tämä on myös helpompi lähettää lukijoidenkin kansainvälisille nettitutuille.

Ei tarvitse huolestua tästä tulevan mikään sääntö. Silloin tällöin, kun tulee jotain ratkaisevaa sanottavaa Suomesta. Muutoinhan maailman palstat ovat täynnä sitä informaatiota, miten muualla menee.

En vain satunnaisten tällaisten uutisten myötä viitsinyt polkaista kokonaan uutta käyttäjätiliä tuonne jonnekin.

Käyttäjän MikaMikko kuva
Mika Mikko

To all of you interested in getting the basics of the euro crisis, I recommend reading "Europe's Unfinished Currency" by Thomas Mayer

Käyttäjän SepSaa kuva
Seppo Saari

"A moment of realization in the media."

The word populism has been generally used - by the media and by the government - to characterize the politics of Finnish opposition. A local newspaper Turun Sanomat [operating in the oldest city of Finland] has been a keen advocate of the official policy as well, including EU and €uro policy.

However, today's (Aug. 9, 2013) editorial of Turun Sanomat has a new tone, and even new overtones. According to TS, the Finnish government itself is guilty of the worst kind of populism by denying the hard facts of economy ["realism"], and keeping the citizens unaware of the crisis and dangers lying behind those figures. And last but not least, Finland has glided into the edge of long recession without preparing the country for it:
"Serious faces and pompous speeches [of the PM and finance minister] do not save Finland's [AAA] ratings."
And as far as to the parties in the cabinet:
"There is no room for populism to buy the support of voters any more."

According to this late awakening for the crisis in the newsroom of TS, there seems to be a continuous lack of serious, professional journalism of economy. Pity.

Käyttäjän susijumala kuva
Henri Alakylä

Chief editor (previous or current, still?) Aimo Massinen of Turun Sanomat is member of the government's (semi-)junior partner, The Social Democrats. The fact that can't be left unmentioned. It'd be very confusing with these ties if TS started a campaign against these ineffective efforts to turn the tide in this gale that dissolves the very foundations of Europe. However, TS can't be silent anymore.

Samuel Brittan wrote in his column in Financial Times how the inevitable will happen eventually. The only question is how much more misery is still left to be delivered before the realisation finally occurs.

Käyttäjän jhuopainen kuva
Juhani Huopainen

Regards to Stubb, Rehn and other policy-whores. Special kudos to our great leaders during the nineties, and their "visions".

Defend Europe, if you still dare
"...This is pure policy error. Europe has needlessly pushed the whole EMU bloc into a deep double-dip recession, and the longest unbroken contraction since World War Two."

On Finland, Dec-2011:
Is Finland Really A Closet Member Of The Eurozone Periphery?

Never forget. Never forgive.

Käyttäjän susijumala kuva
Henri Alakylä

Many thanks for linking mr. Hugh's excellent post.

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