PLP Advisors, LLC

Will Europe's Youth Unemployment Rate Lead to Revolution

 

Grand Rapids, MI -- (ReleaseWire) -- 06/20/2013 -- In today's world it is hard to stay abreast of everything that is happening financially. Dennis Tubbergen, a financial advisor, author, radio show host and CEO of PLP Advisors, LLC can be counted on to give a hand when it comes to understanding the latest events in U.S. and world economics.

Whether people enjoy his monthly newsletter at www.moving-markets.com or his blog at www.dennistubbergen.com, Tubbergen is dedicated to sharing his viewpoints and opinions. On June 13, his blog was titled German Finance Minister Fears Revolution From Young Unemployment Rate.

"The German Finance Minister, Wolfgang Schauble, warned that the Eurozone needs to do more to alleviate the pain being experienced by European youth who are unemployed," began Tubbergen. "Interestingly, the Finance Minister used the word 'revolution' to describe what would happen in the event that welfare standards were toughened.

Below he quotes from a May 28, 2013 Reuter's article on the topic.

German Finance Minister Wolfgang Schaeuble warned on Tuesday that failure to win the battle against youth unemployment could tear Europe apart, and dropping the continent's welfare model in favor of tougher U.S. standards would spark a revolution.

Germany, along with France, Spain and Italy, backed urgent action to rescue a generation of young Europeans who fear they will not find jobs, with youth unemployment in the EU standing at nearly one in four, more than twice the adult rate.

"We need to be more successful in our fight against youth unemployment, otherwise we will lose the battle for Europe's unity," Germany's Schaeuble said.

While Germany insists on the importance of budget consolidation, Schaeuble spoke of the need to preserve Europe's welfare model.

If U.S. welfare standards were introduced in Europe, "we would have revolution, not tomorrow, but on the very same day," Schaeuble told a conference in Paris.

"The Finance Minister is right," declares Tubbergen. "If welfare benefits were reduced for young, unemployed Europeans, a revolution would occur. Historically speaking, economic winter seasons are prime time for revolutions. And when one takes a look at some of the economic statistics relating to Europe, the outlook is not optimistic. Here is a bit more from the article."

Prime Minister Mariano Rajoy of Spain, where youth unemployment is among the highest in Europe, called for the euro zone to triple aid to small businesses and allow governments to subsidize the hiring of younger workers without sanctions for overspending.

In recent weeks Germany, wary of a backlash as many in crisis-hit European countries blame it for austerity, has taken steps to tackle unemployment in the bloc, striking bilateral deals with Spain and Portugal.

"We have to rescue an entire generation of young people who are scared. We have the best-educated generation and we are putting them on hold. This is not acceptable," Italian Labour Minister Enrico Giovannini said.

Rajoy said both the European Investment Bank and European Central Bank should do more to help credit flow to small firms.

Small and medium-sized companies in Spain and much of southern Europe pay much higher rates for loans than their counterparts in the north. Youth unemployment in Spain is above 57 percent as layoffs continue in a deep recession.

"With all respect for its independence, I believe the ECB can and should do more," Rajoy said in a speech at the end of the conference, also saying funds channeled to small firms via the EIB should be boosted to 30 billion euros ($38 billion) a year.

He called for "some kind of common European debt" and said Europe should temporarily exclude social security subsidies for youth hiring from its calculation of member states' budget deficits, a proposal that will likely meet resistance.

“'Common European debt' has been suggested by many," notes Tubbergen. "But, mark my words, it will never happen. That would require stronger European economies like Germany to help with the debt load of weaker economies. The German electorate will not stand for that."

Tubbergen goes on to say that calls to expand credit will also go unheeded. Extending credit to someone who is not credit worthy is no solution; it’s only a temporary band aid. Meanwhile youth unemployment is expanding.

"Even without tougher welfare standards, Mr. Schauble’s concerns are valid," concludes Tubbergen.

To read the blog in its entirety go to http://www.dennistubbergen.com and select his June 13, 2013 entry.

Tubbergen’s syndicated radio show can be heard on metro Michigan stations WTKG 1230 AM and WOOD Newsradio1300 AM and 106.9 FM.

About Dennis Tubbergen
Dennis Tubbergen has been in the financial industry for over 25 years and has his corporate offices in Grand Rapids, Michigan. Tubbergen is CEO of PLP Advisors, LLC and has an online blog that can be read at www.dennistubbergen.com. To view Tubbergen’s latest Moving Markets? newsletter, go to www.moving-markets.com.

The opinions expressed herein are those of the writer and not necessarily those of USA Wealth Management, LLC. This update may contain forward-looking statements, including, but not limited to, statements as to future events that involve various risks and uncertainties. Forward-looking statements involve known and unknown risks, uncertainties and other factors which may cause actual events or results to differ materially from those that were forecasted. Therefore, no forecast should be construed as a guarantee. Prior to making any investment decision, individuals should consult a professional to determine the risks, costs, benefits and fees associated with a particular investment. Information obtained from third party resources is believed to be reliable but the accuracy cannot be guaranteed.