Slovenia’s population is aging, and aging fast.
Last year the country’s voting population rejected a bill to raise the retirement age, dealing a blow to the government’s plans to control public debt.
The country’s actual retirement age is one of the lowest in Europe.
But the new centre-left party headed by Zoran Jankovic, who won a surprise victory in December’s snap elections, plans to enact a pension reform that would raise the retirement age to 65.
Make sure to watch the video clip of this story by clicking here. As I watched this report, a few things struck me:
- First, like Greece, Slovenia has a low birth rate. There are now more people over 65 years old than children.
- Second, to address this problem, they are raising the retirement age. This is going on everywhere as people are living longer. But listen to comments from the couple who said "after 40 years of hard work, people are exhausted and deserve to retire" and the HR lady who said "we see great value in older workers".
- Third, they are not in the mood to increase immigration. There was a government official in the clip who said "this will add to other social problems." Most Europeans, including Greeks, are notoriously xenophobic and anti-immigrants, much to the detriment of their economies.
- Fourth, and most important, the report does not address the link between economic inequality/uncertainty and reduced birth rates. One of the reasons people are not having as many kids as before is because they are worried about their economic prospects. Stock markets going up and down like a yo-yo, unemployment soaring, all the negative headlines, it is no wonder young couples are putting off having kids or deciding not to have them at all.
While I use Slovenia as an example, many countries in Europe and around the world are grappling with similar demographic realities. Even in Canada, an aging population is going to place strains on government finances, which is why public pensions have become a fat target for Conservatives (proving my point that Harper's government is totally clueless about meaningful pension reforms).
Elsewhere in southern Europe, things are not getting better. On Friday, epiphany celebrations were marred by public derision and Greek workers in the private sector are in no mood to see cuts in their wages. Both Greeks and Italians are protesting reforms (see below).
And last but not least, we have George Soros warning us of the end of Europe:
How much do you want to bet that Soros is long euros and long risk assets? Show me your book Mr. Soros, and spare us with your "catastrophic" warnings. I simply have no time or patience for over-hyped hedge fund drivel, especially when it comes from Soros who is now followed by everyone on the planet.
Billionaire investor George Soros said a fracturing of the euro area would have “catastrophic” consequences and that markets have started pricing in the possibility of the region breaking up.
The disintegration of the 17-nation currency bloc would affect Europe and the “entire global financial system,” Soros said in the southern Indian city of Hyderabad today in response to questions.
Leaders in the euro region have struggled to solve a sovereign-debt crisis that’s hampered the global recovery and is now in its third year. Greece, Ireland and Portugal have already been forced into bailouts and the European Central Bank has provided unprecedented cash injections, easing borrowing costs for Italy, Spain and Belgium.
Soros said it isn’t currently clear whether the crisis will be contained, adding many people “feel” it’s “over the brink” and “insolvable.”
The euro fell to a 15-month low against the dollar on concern the region’s governments and banks will struggle to raise funds. It weakened 0.5 percent to $1.2875 at 9.38 a.m. London time, after falling as much as 0.7 percent to $1.2848, the least since September 2010.Markets are “far from equilibrium and extremely difficult to predict using the yardsticks or methods that were used in the past,” Soros said, adding investors “have to play it safe” and that “unless you can anticipate events correctly, it’s better to do nothing than to keep on losing money.”
The reality is that Europe will survive this crisis but their leaders are dragging their feet, avoiding a comprehensive solution that eurozone desperately needs. Greece will not exit the eurozone. Despite all the protests, Greece's least bad option may be internal devaluation. European Central Bank policymaker Athanasios Orphanides recently called for eurozone leaders to abandon plans to make private sector investors help reduce Greece's debts -- a move likely to get little traction with the currency bloc's paymaster, Germany (read Andreas Koutras' comments on abandoning the PSI here and here).
But both Greece and Italy need to turn their focus on stimulating their economies and nabbing tax cheats. And I 'm not talking petty tax evasion here. That is small fries. I'm talking about hundreds of billions of euros parked offshore in Swiss bank accounts as well as other tax havens (like Cyprus, the destination of choice of Russian and Balkan mafiosos).
Importantly, if leaders in Italy and Greece got serious on growth and big-time tax evasion, maybe all these austerity measures would be a little more palatable. But to continue squeezing the poor and working poor is simply madness which will lead to more social unrest and anarchy.
Covered a lot here but want to keep my readers focused on the bigger picture. Intelligent pension reforms are needed in Europe and elsewhere, but if we're going to make the world safer and better for all our citizens, we need other reforms too.
Below, some clips touching on some of the topics raised above. Once again, Europe will get through this crisis but in typical European fashion, it will be like watching paint dry. And unless you have access to their books, I would ignore public proclamations from George Soros, Bill Gross, Ray Dalio or whichever else investment guru comes out to warn us of the end of Europe or the end of the world as we know it. That is pure rubbish, great for selling newspapers, bad for your investment portfolio.