Options for the Eurozone

Nouriel Roubini has written a number of good pieces on the Eurozone crisis.  His latest one in the Financial Times is no different.  It provides a summary of how the Eurozone got to this point and the options left for it going foward.  Here are the options according to Roubini:

(1) The euro could fall sharply in value towards – say – parity with the US dollar, to restore competitiveness to the periphery; but a sharp fall of the euro is unlikely given the trade strength of Germany and the hawkish policies of the European Central Bank.

(2) The German route — reforms to increase productivity growth and keep a lid on wage growth — will not work either. In the short run such reforms actually tend to reduce growth and it took more than a decade for Germany to restore its competitiveness, a horizon that is way too long for periphery economies that need growth soon.

(3) Deflation is a third option, but this is also associated with persistent recession. Argentina tried this route, but after three years of an ever deepening slump it gave up, and decided to default and exit its currency board peg. Even if deflation was achieved, the balance sheet effect would  increase the real burden of private and public debts. All the talk by the ECB and the European Union of an internal depreciation is thus faulty, while the necessary fiscal austerity still has – in the short run – a negative effect on growth.

(4) So given these three options are unlikely, there is really only one other way to restore competitiveness and growth on the periphery: leave the euro, go back to national currencies and achieve a massive nominal and real depreciation. 

A key point here is that ultimately a real depreciation is needed for the troubled Eurozone countries.  How it gets done is the burning question.   

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Public transportation options in Valparaiso De Chile

Valparaiso has good public transport system. It has Metro, city buses, trams and trolleys.


Trolleys
Since Valparaiso has hill on one side, at many places you’ll find small trolleys (is that the right name for these things?) like the ones shown in pics. They’ve got an extremely simplistic design- a minivan sized metal body with rudimentary seats, with simple wheels to ferry people up and down the hill. The short ride which lasted 5 mins, taking to to a vertical height of about 50-60 meters, did cost 300 pesos or Rs 30. I came down using the road.



Trams:
In downtown Valparaiso, buses powered by overheard electric cables can be seen. They’re very similar to regular buses, moving on rubber tyres on the road (instead of metal wheels moving on predefined tracks). I couldn’t travel in them. Because they run on electricity, they’re probably more greener than their diesel counterparts. I don’t see any other uniqueness about them,

City Buses:
One unique design feature I noted about the city buses in Valparaiso is the exhaust outlet. They release exhaust gases higher up into air, than releasing them at lower levels, as in India. I think this design helps reducing pollution a bit. Most of the city buses were Mercedes Benz made.
 
Bus ride from one end of the city to another did cost me about 390 pesos or 39 rupees. Buses seemed to have 3 different rate slabs- local, directo and student. There was no separate conductor- driver himself was issuing tickets. I didn’t see any Volvo type ac city buses- being a cold place, Valparaiso doesn’t need AC buses in the first place. Bus stands were pretty simple.



Metro: Cost about two times compared to bus. I didn’t travel in it through.
Self Drive 4 wheel drive rental cycles:
Whatever you call these: pedal operated vehicles, large enough to seat 6 people are available for rent. You can rent them, seat your family and peddle all the way. Ideal for short drives around the sea shore.
  
Horse Ride:

 
Volvo B7R like intercity luxury coaches:
      
Valparaiso also has shared taxis, which run on a predefined route (like share autos in Chennai). I couldn’t try these either. The 9 lakh range Chevy Optra costs about 6 lakhs there

One can also hail a taxi, costs Rs 25 for first 200 meters and so on.

Toy train service in Santiago * Ceremony at the Palace * Santiago city views * Valparaiso city views * Cats in Valparaiso * Mercado Centre * Srilankan Posts *

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