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Can-Kicking 101
No End in Sight for the Euro Crisis

Smart analysis from the FT‘s Wolfgang Münchau on the seemingly intractable problems besetting the European Union and its common currency these days:

I do not have the foggiest idea what the probability of a break-up of the euro was during the crisis. But I am certain that the probability is higher today. Two years ago forecasters were hoping for strong economic recovery. Now we know it did not happen, nor is it about to happen. Two years ago, the eurozone was unprepared for a financial crisis, but at least policy makers responded by creating mechanisms to deal with the acute threat.

Today the eurozone has no mechanism to defend itself against a drawn-out depression. And, unlike two years ago, policy makers have no appetite to create such a mechanism.

As so often in life, the true threat may not come from where you expect—the bond markets. The main protagonists today are not international investors, but insurrectional electorates more likely to vote for a new generation of leaders and more willing to support regional independence movements.

Europe hasn’t solved the problem of the euro. It has exchanged an acute financial crisis for a chronic economic depression and avoided a financial market meltdown by converting it into a slow-moving but inexorable march toward a political crisis.

Unless the EU authorities can figure out a way for Italy, Spain, and France to flourish inside the euro, sooner or later the voters in those countries will elect politicians who refuse to chain their futures to a corpse.

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  • Pete

    To revitalize Spain, Italy, Greece, and even France, their economies have to make things, in either good or service, some for the domestic market some for export.

    So in today’s competitive globalized markets, what can these countries produce in significant enough quantities & quality at a competitive price to provide decent jobs for their people????

    It is time for Europe to get to work. Can the Europeans do it. Odds are no. Too many years of la vida dulce has rotted out their work ethic.

    • Andrew Allison

      France, Italy and Spain, et al. have been living beyond their collective means for decades and cannot be competitive in the global market without devaluation and a significant decline in standards of living (Greece too, but it is an economic pimple). It’s also clear that the political elites of all of them lack the ability to make the necessary adjustments, which suggests that it will end with a bang, like Greece but on a very much larger scale. Since Germany won’t accept devaluation the obvious solution is for that, and any other economically viable, country to leave the eurozone and let the chips fall where they may.

  • wigwag

    It is long past time for Americans to wake up; the days when Western Europe was a reliable American ally are gone. The European allies who played a modest role assisting the United States in its Cold War victory are now little more than a millstone around America’s neck. The reality is simple; most of America’s NATO allies have morphed into the largest and most undeserving cohort of welfare recipients in the world and unfortunately, it is the United States which is stuck buttering Europe’s bread.

    The failure of the Euro, like the failure of the European Union itself, represents not the underlying pathology of contemporary Europe but is merely the symptom of that pathology. Europe has failed because its experiment in post-liberalism has failed. Having long ago lost its self-confidence, its vitality, its fecundity and its sense that it has a special role to play in the world, Europe has become one gigantic anachronism.

    European elites who control all of the mainstream European political parties are so smitten with the charms of multiculturalism that they view all societies, cultures and traditions as equally valuable and worthwhile with one exception; they have nothing but contempt for their own.

    Millions of Europeans recognize this which is why we’ve seen the rise of political parties like UKIP in Great Britain and the PVV in the Netherlands. Unfortunately in other European nations (France comes to mind and so does Hungary and Greece) this recognition has given rise to parties with fascist sympathies.

    My guess is that the rise of these parties is too little, too late to rescue Europe from its malaise.

    When the American States banded together into the United States in the 18th century, they were guided by a shared philosophy; a respect for the values of the Enlightenment. The American experiment was a magnificent success. When the European States attempted to band together in the late 20th century, they too shard a philosophy; it was a post-liberal philosophy that granted greater respect and deference to foreign ideologies than to ideologies native to Europe. Europe’s experiment was a monumental failure and the consequences of that failure are still being played out.

    Europe is a lost cause; it’s not coming back. Until the United States comes to grip with this reality, it will not be possible for our country to develop a rational foreign policy nor will it be possible for the United States to orient its economy to deal with the consequences of what is likely to be many lost decades for the European economies.

    Most importantly, the United States needs to learn from Europe’s mistakes. Post-liberalism doesn’t work; it is a recipe for decline, decadence and irrelevance. Unfortunately our nation is filled with self-appointed experts (often housed in think-tanks and universities) who want America to descend into the self-imposed morass where Europe now finds itself.

    We can’t listen to them.

    • Andrew Allison

      I agree that our NATO allies are allies in name only, but question whether America’s undeserving cohort of welfare recipients is much different from that in Europe.

    • f1b0nacc1

      Brilliantly said, and exceptionally well reasoned.
      In particular, you point out that Europe, once a model to the rest of the world, is now a group of worthless layabouts. A few on the periphery still have what it takes, but even most of them live on the sufferance of their betters, subsidized by real economies, ruled over by inbred elites. Might I suggest that a similar fate awaits us should we emulate their example?

    • Boritz

      “It is long past time for Americans to wake up; the days when Western Europe was a reliable American ally are gone.”
      And don’t forget that at the height of the cold war France was always playing a game of triple cross between the U.S. and U.S.S.R.

  • Jacksonian_Libertarian

    I’ve been saying here for years now that the EU and the Euro would disintegrate just like the Soviet Union and Warsaw Pact before them.

  • David Nelson Black

    Western Europe is not a country, wigwag. And you are an insane ideologue! And an arrogant moron. Seriously, try reading aloud the things you’ve just written.

    Have you even been to Germany? Or any of the Scandinavian countries? Everything works. There is no underclass. They have higher living standards and higher levels of social equality. Many of them either laugh at Americans or feel sorry for us because of how stupid and ridiculous so many of our problems are! Problems which I shouldn’t even need to elaborate here, but since you are probably completely blind to them or in denial, they include an impoverished underclass, huge numbers of the lower-middle classes in debt that they’ll never climb out of, 20-somethings with more debt from student loans than the lower classes’ mortgages are worth, the greatest number of per-capita public shootings in the world, and idiots like you who call for “Americans to wake up” despite having talked yourself into an intellectual coma over the failure of “post-liberalism” — which you never define or even do more than refer to, dubiously, as having “granted greater respect and deference to foreign ideologies than to ideologies native to Europe.”

    There are several different ‘Europe’s (and more than several ways to break it down and understand it) with a number of distinct countries in each, that will remain distinct long after the Euro crisis is forgotten. You should probably go learn about them.

    Until then, you may want to consider undertaking efforts to sound like less of a pig-headed ignoramus.

    • wigwag

      Actually, I’ve been to Germany several times; as for Scandinavia my travels have taken me to Aarhus, Copenhagen, Malmo and Oslo.

      Western Europe’s postwar prosperity is largely due to the fact that in the post World War Two years it has morphed into the paradigmatic welfare queen. But for the enormous subsidies provided by the American taxpayer, it is questionable whether Europe would even exist in its present form.

      There’s no need to even mention the enormous sacrifice in blood and treasure the United States spent during two world wars started by Europeans; of all the benefactors of the victory in the Cold War, no one benefited as much as the Europeans. Of course the majority of costs were borne by Americans.

      Those Germans who you praise as so civilized; how much do they contribute in blood or treasure to maintaining a world system that allows them to become wealthy running their export oriented economy? As for those Scandinavians; who is it that polices the world’s oceans making it safe for 4 million Norwegians to become wealthy exporting oil?

      In industry after industry the U.S. sacrifices to Europe’s advantage. To provide just one example; American consumers pay virtually 100 percent of the research and development costs for the discovery of new medicines. The drug companies recoup these costs by price gouging Americans while Europeans do what they do best; ride for free.

      It seems that Europeans can’t even hold up their end of the bargain when it comes to sex. We’ve always heard about those great Italian and French lovers: I guess those days are gone. After all, France, Germany, Italy and their neighbors can’t seem to make babies any more; birth rates are plummeting. Why wait; why not turn over the keys to the country to Turkey and Algeria right now?

      Face it: Europe is toast. It’s dying.

      Good riddance.

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