Europe Is Still Hip Deep In The Bad Stuff
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  • Cromwell

    Italian 10-yr yield is back over 7% — admittedly in thin markets — and they’ve a bargeload of auctions tomorrow and Thursday.

  • joe

    Yes, the Euro elites designed a currency for a Germanic/Nordic type culture, but the Latin countries agreed to operate within its monetary policies. Eurocrats forsaw that probably some of the Med countries would run a deficit over 3%, even Germany and France did in the early oughts. What took them by surprise was the level and extent of rapacity by Spain, Italy, Greece and Portugal’s banks. They literally borrowed as much as they could to rebuild infrastructure for political purposes, flood the domestic lending market and finance oversea acquisitions for the multi-nationals.

    We expect politicans to receive perks, kickbacks and steal. Our only demand is they moderate their baser instincts and not affront common decency. The Eurocrats thought the PIGS et al would pinch from the till (even though they said they would not), not mortgage the shop.

  • Excellent points, Dr. Mead.

    Every technocrat in Europe should read those last several paragraphs every day. Your column reminds me of the late Senator Moynihan’s observation that culture matters most. Many in the past have tried to “paper over” cultural differences with printed money, much like the ECB seeks to do now. Nearly all have failed.

    There is no answer for the woes of Spain and Italy that doesn’t involve wholesale entitlement and employment reform. It really is that simple. What isn’t simple is what will happen to the swaps market should any of these Club Med countries (including Greece) default on their unsustainable debt and/or seek to denominate it in another currency.

    2012 is going to be an interesting year.

  • Luke Lea

    “But if Europe dodged the charge of an angry bear last month, it is still hopelessly lost in the woods. ”

    Nice overview, well expressed. Even if the Eurozone falls apart, as seems inevitable, Europe as a whole could still do well. In some respects they do better than the US: healthcare half as expensive, less exposed to low-wage imports and offshoring of investment, greater ethnic homogeneity intrastate which makes them more willing to finance redistributive welfare programs, greater willingness to substitute leisure for GDP, higher real hourly wages (especially when you give a proper evaluation to leisure). In the US we sacrifice welfare to state power, democratic values to empire. At least in my judgment.

  • Corlyss

    I fully expect Europe, under German domination, to shape up or else devolve into an old fashioned war of the have-nots against the haves. Maybe Maggie and GHW Bush were right to fear a united Germany after all.

  • Jacksonian Libertarian

    I would be more hopeful for Europe if I were seeing TEA Party rallies seeking to limit government. Instead we only see OWS, Labor, and Socialist demonstations, seeking more handouts from the bankrupt welfare state. It is clear the Europeans will have to learn the Socialist lesson (Socialism is great, until you run out of other peoples money), the hard way.

  • Harold Seneker

    One has to agree, Greece is hopeless. (I like the Greeks; we went there on oiur honeymoon. But they have been led down the garden path, and now they have to deal with the consequences.) Portugal, too, is very reluctant to clean up its act.

    But Spain has been biting the bullet (as has Ireland which everyone seems to have forgottern). Spain’s outgoing socialist government substantially cut the budget and otherwise introduced austerity, and the incoming center-right government ran on a platform of blood, sweat, toil, and tears. I cannotspeak to Italy,but there has always been more to Italy than meets the eye, for reasons this article has touched upon. (There is a standing European joke: In Switzerland they ask how much you pay in taxesw (which is public record); in Italy, they ask, You pay taxes?!)

    So, I think, much hangs on Italy, where they have changed governments and otherwise acted as though they understand the lesson being taughtby Greece. Yes, we shall see, but there may be ore hope than you think that Club Med may yet learn something from the north Europeans who come south with their money in wintertime and buy their real estate.

  • Patrick Carroll

    @Luke Lea: European health care will kill you. Arabs from North Africa are being imported to do work and pay taxes so infertile retired Europeans can continue to enjoy their socialist utopia. Said Arabs are not integrated into the rest of society and are radicalizing. Europeans are currently on holiday and won’t be back until the middle of January, and after that they’ll still have more than a month of vacation coming in the new year. European productivity (apart from Germany’s) has been sliding for years. In the US we still – by a slim margin – value thrift and independence over extravagance and bondage, and if the US is an empire, it is so with a lighter touch and the provision of more benefit than any empire in history.

    In other words – and I’m telling you this as a person who grew up in Ireland before moving to the US and who still has family in Europe – your takes on Europe and the US are completely [mistaken].

    At least in my judgment.

  • ErisGuy

    “They designed a technocratic government for a population that fears and distrusts technocrats.”

    Their fear is well-founded. “Technocrat” is just a name.

    The founders forgot to staff the government with technocrats, preferring corrupt politicians and their cronies.

    Technocrats have real degrees, not primary degrees in management, the humanities, or the social sciences. They attend other universities than the Sorbonne. Their attitudes are not those of bureaucrats and politicians.

  • pashley1411

    What will happen with the Euro depends on the depth of commitment of voters to the European superstate.

    My surmise, admittedly very distant, is that the EU is a construction of the elites that, when voters are given the opportunity, will turn down, including the political parties that are Europhile.

    So when the costs are tallied, the voters will dump politicos too closely associated with asterity in favor of that ole time liquor, easy money.

  • Snorri Godhi

    Obvious as the cultural differences are between Southern and Northern Europe (and, to the trained eye, within the South and within the North), I am still unable to understand how replacing the euro with funny money is supposed to help Southern Europe. Why do you think they wanted to join the eurozone in the first place?

    Luke Lea: “In the US we sacrifice welfare to state power”
    There is no trade-off: the welfare state IS state power.

  • Yet another great article describing how things are broken. You have a great eye for discerning the little things that are causing the problems.

    However, when you say “Both the economic and the political foundations of liberal capitalist democracy are under attack across much of Europe today.” don’t you really mean that EVERY politician of every stripe prefers to attack the golden goose because it gets votes? When democratic countries believe that taxes should be public record (Switzerland?) but don’t think that government payments to individuals should be public how can we ever reach an agreement. Of course people will vote for more money! Would they vote for more ‘income,redistributed’ if they got a 1099-GOV with it?
    Our stupid leaders are railing against the banks and suggesting that home loan principal be reduced. If I do that myself with my bank I get a 1099-C. Is it fair that working people get reports for every dollar but government can wave a magic word wand and change tax money to ‘income, redistributed’ and that is not reported at all?
    1099-GOV 1099-GOV 1099-GOV
    Only when we know where money is going will be be able to manage it.

  • Mike

    Hi from an American in Germany. I would spell the southern Euro “sewer-o”, but we’re “neuro-tics”.

    I hope that the whole charade is only to buy enough time for the banks to rearrange their portfolios, so that the re-cap later will be less painful. It’s cynical, but the only alternative is to believe that Europe’s leaders are in cloud-cuckoo-land.

    I wouldn’t be so quick to speak in north-south terms though. Greece is hopeless, but the others were in reasonable shape before 2008 and could be so again, and are salvageable. They certainly don’t deserve Greece around their necks.

  • So how much money is the EU still spending to ensure that improperly curved inexpensive bananas do not sully the palates of Europe? How many other regulations could be cut tomorrow and result in both cutting the deficit, improving the quality of life for the people, and enabling the creation of more jobs?

    This is the sort of legal action that needs to be done in Greece and the rest of the troubled economies of the EU. Some small government parliamentary grouping needs to introduce statism prune backs that would not pass but would be useful because it would identify exactly who is holding back the economies of these countries.

  • RAlazar

    “If Europe had tried to design the best possible currency regime for the people it had, it probably would have designed two different currencies: a neuro for the hard charging north and a seuro for Club Med. Instead, it designed a currency for an idealized European public that did not exist: more disciplined in the south and more generous in Germany than the actual Europeans are.”

    Where to begin?

    (1) “Europe” (its top politicians) *did* try to design the best possible currency regime for the people it had, and decided that the political advantages of unity (as a “counterpoise” to–that is, opponent of–the United States) outweighed the difference between the northerners’ neuroticism and the southerners’ seuroticism. There is no reason to think they would decide the reverse even now.

    (2) What the southerners lack is not “discipline” (the Cosa Nostra is very well disciplined, just not very public-spirited) and what the northerners lack is not “generosity” (just an unlimited willingness to be exploited).

  • Andrew Allison

    Another perceptive essay on the problem with Europe can be found at

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