These are the political and economic problems the ECB is dealing with.
France, for example, just got a three-page letter from the EU Commission with a detailed description of demand- and employment-stifling structural reforms it has to implement – as a condition of getting access to the €300 billion investment package the highly-paid Brussels commissioners have yet to figure out how to finance.
The key part of these reforms are more flexible labor markets, a euphemism for easier hiring and firing and all sorts of part-time and fixed-term employment contracts. At the moment, 84.2 percent of all French labor hires are based on loathed CDD fixed-term contracts (contrats à durée determinée).
The rub is that without a permanent job contract you can’t even rent an apartment in Paris, or, apparently, anywhere else in France.
Read More Job losses and weak demand dent euro zone economy
This example makes it easy to understand the social outrage at radical labor market reforms. The present French government, with record-low approval ratings (somewhere between 15 and 20 percent), and squeezed from left and right, is likely to ignore the demand for further labor market reforms while insisting on its share of any future EU manna.
Italy is another example of a country that is getting nowhere with its reform agenda. Mired in a continuing recession, with a jobless rate of 12.6 percent, 43 percent of unemployed youth, and government’s approval ratings falling 13 points so far this month, Italy is experiencing daily protests against the proposed changes in labor protection laws. The three main labor unions – more than 8 million strong — have scheduled a nationwide strike for December 12.
¡Si se puede! (“Yes, we can!”)
With a growth rate of 1.2 percent in the first nine months of this year, Spain looks like a booming euro area country, despite its 24 percent unemployment rate, more than 50 percent of its jobless youth and 30 percent of its working poor earning less than €1,216.00 per month.
With a budget deficit of about 6 percent of the gross domestic product (GDP) expected to be overshot by the end of this year (after a deficit of 7.1 percent of GDP in 2013), Spain is very far from the euro area budget deficit limit of 3 percent of GDP. In spite of that, a number of fiscal stimulus measures have been put forward as the governing center-right party gets ready for elections in late 2015. It is currently running neck-and-neck with a recently launched radical left Podemos (“We Can”) party polling at about 28 percent. Podemos is led by a pony-tailed political science professor whose members are chanting President Obama’s slogan “yes, we can!”
Germany’s weak economy will probably end up with a balanced budget next year, but its center-right and center-left governing coalition will also face growing political challenges. In a historic deal, the three left parties – the far-left party Die Linke, Social Democrats (who are now part of the governing coalition) and the Greens – have agreed last week to form a “red-red-green” government in the federal state of Thuringia.