It is a while since the mainstream media was filled by stories about the impending collapse of the Spanish, Portuguese, Italian and Greek economies due to their massive government debt. But you have to look at what is happening to citizens all over the world resorting to short term loans.

However, these four main candidates were either bailed out by other Euro Zone governments and the EU itself to keep their economies afloat.

The bail outs have been executed with many strings attached, as all four have had to put in place severe austerity measures to cut their government debt.  These are hard hitting methods such as pay cuts, tax rises and large public sector job cuts, especially in Greece.

But, have these and other policies managed to halt or slow down the debt crisis or is it still spreading?

Best way forward

It may now be time for the EU and its most powerful, and economically stable, countries to accept that the tough austerity measures imposed on the people and the public sector of the problem economies aren’t necessarily working and if anything is causing the debt crisis to spread to other EU countries.

Some economists have called for a review of the current methods adopted before the crisis affects other smaller states in the EU.  They have also appealed to the biggest economies to spend their way out of the crisis instead of making cut backs and raising personal taxes.

The EU should learn from the mistakes made by Japan in their struggle with the economic stagnation and near zero interest rates for over 20 years.  They are still not out of the woods and only this week announced a massive $225 Billion stimulus to help the automotive and defense industries that will aid other sectors to expand.

Worst way forward

It has become increasingly clear that the current methods of austerity are making matters worse for even the stronger economies in the world, especially the big EU states and the USA.  There have been a number of economic stimuli that have only managed to keep some of these economies on an even keel.  However, the global economy needs the same level of stimuli to allow growth to return and maintained.

The other way to ensure a sustained growth would be to start infrastructure projects to give each economy a natural boost, which need to be further strengthened by tax cuts, both personal and corporate.

The reality

The unfortunate reality of the debt crisis is that the situation is getting worse and it is definitely spreading in the Euro Zone.  The problem is that there are now too many theories about how to deal with the various economies in deep trouble with their debt repayments.

It is at these times of serious trouble that the world and the EU in particular need strong leaders with vision.  But, where are they to save all of us from the inevitable economic collapse?!

Economists or Politicians: Who can avert the crisis?

It is obvious the current leaders are struggling with the tide of financial and economic issues and it may be time to either change the direction taken so far or to think out of the box, which many mainstream politicians in the EU just can’t do.

The economists didn’t see the crisis develop or able to warn the leaders about the debt crisis after the bank bailouts of 2008.  It was the bank bailouts that caused governments to get into trouble.  But, who made the important decision of helping the banks?  The politicians, of course, as they have to answer to their masters!

Where does this leave the ordinary residents of the impoverished countries? We see them increasingly turning to loan lenders for short term loans.