The Panhellenic Socialist Movement and the New Democratic Party which supports the austerity policy and staying in the eurozone finally won the general election of Greece. The alarm of Greece's withdrawing from the eurozone has temporarily been lifted but the market risk has not yet been reduced. The yields of 10-year government bond of Spain, which had just received 100 billion euro of load funds, again hit a new high, reaching up to 7.08 percent. The yields of Italian 10-year government bond also rose to 6.06 percent, which is undoubtedly a pot of cold water to the European Union countries.
The current situation of the eurozone is severe and it just like riding a bike, move forward or you will fall behind. Whether the "bike" can be ridden stably and arrive at the "end" to build a unified fiscal union depends on three factors: motive power, external environment and operating mechanism.
The eurozone has become a "loaded bike" due to such factors as high debt, high welfare and aging of population. The motive power is undoubtedly the most crucial factor whether the eurozone can move forward under heavy burden. The strict financial discipline implemented in the eurozone is less controversial but the policy of austerity is gradually showing a trend of more reduction more debt. After all, a seriously ill person will be weaker and weaker if he or she indulges in a diet to lose weight. Therefore, the policy of expansion and stimulation advocated by Francois Hollande is reasonable.
It seems a good method for the eurozone to launch a long-term refinancing plan at the beginning of 2012. Although it will bring potential inflation and damage the interests of the core countries and the public, it can ease the predicament of a difficult financing in European banks, promote the economic competitiveness of the eurozone and is conducive to economic resurgence. More importantly, the method can provide sustained power to help the eurozone out of crisis as soon as possible.
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