Money The Least Of Europe’s Troubles
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  • Kenny

    I said it before and I’ll say it again — imagine what the situation in Europe would be like if the U.S. pulled off its security blanket and those freeloading countries, including France and Germany, actually had to pay for their own defense?

    Tell us what that would be like, Mr. Mead.

    And is that why the U.S. taxpayer still has to foot the bill?

  • Lexington Green

    “Europe’s first task wasn’t to build a stable monetary union after 1990; it’s first task was to build an enduring democratic order.” What if the elites building the European project wanted to move away from democracy, toward a bureaucratic, unaccountable autocracy? What if they knew that a monetary union would create inescapable contradictions, which could only be resolved by cramming down fiscal controls from above? What if they knew that monetary union was a step toward stronger centralized, undemocratic control precisely because it was incompatible with sovereignty or democratic accountability? What if the entire European project is authoritarian and anti-democratic at its core? What if the end of the Cold War meant not the triumph of democratic capitalism but merely the death on one multinational oligarchy, to be succeeded a less brutal but more clever iteration of the same idea based in Brussels rather than Moscow? What if Fukuyama was kinda/sorta right about a Hegelian evolution toward an end state for political organization — but the end state is a cartelized, elitist, fascistic, anti-democratic union of business and government power? That seems to be the direction of convergence for China, Europe and the USA. Democratic capitalism was a phenomenon of the English speaking world that is currently on the defensive, if not in intensive care. The Anglosphere has some big challenges ahead. The 400 year old goal of allowing no single power to dominate Europe needs to be dusted off and examined. It may not be as obsolete as it looked during the Cold War.

  • Mark Michael

    Thomas J. Sargent wrote an op-ed for the WSJ, Feb. 3rd, headlined, “An American history lesson for Europe” in which he told about the relationship between our states and the federal government with respect to debt. Recall, during the Revolutionary War we printed paper money called “Continentals.” They were not backed up with anything, we printed way too many, and the expression, “Not worth a Continental!” cam about! (Ben Franklin benefited, he owned the printing presses!) Well, after the Constitutional Convention and the Constitution’s adoption in 1789 plus, Alexander Hamilton persuaded the feds to take over the debts that the states and the continental government incurred during the Revolutionary War. We paid them off dollar-for-dollar!

    Thus was born the sound dollar philosophy – backed up by gold at $20.67 per Troy ounce. According to Sargent, that debt was worth about 40% of our GDP at the time.

    Quoting the article, “Now fast forward into the next century. To finance canals and railroads, many state governments incurred large debts in the 1820s and 1830s. A financial crisis in the late 1830s pushed many of those state debts into default.

    “Appealing to the precedent set by the 1789 bailout, state creditors asked the federal government to bail out the states once again. After an enlightening debate, in the early 1840s Congress declined, so many states repudiated their debts.

    “In the aftermath of those repudiations, many states rewrote their constitutions to require year-by-year balanced budgets, something they had never done before. As noted, fiscal crises, like the one in Europe today, often produce political rearrangements — at best peaceful ones like these.”

    Sargent goes on to say that if the feds had yielded to the temptation to bail out the states, no doubt they would have assumed greater control over their affairs.

    As it was, we retained a highly decentralized nation until the Great Depression gave statists another “opportunity” to bail out the country, this time not the 48 states and their debts, but the private sector banks and their debts. (Milton Friedman and Anna Schwartz blamed the Fed for its mismanagement of its role as bank of last resort and keeper of monetary policy for a big part of the problem.)

    In any case, FDR and his New Deal ensued and we embarked on a more centrally-controlled economy after that, of course.

    Back to the EU, the euro, and its problems. The American example of the 1830s and 1840s are the better model to follow than what happened in the 1930s and the Great Depression IMO. For sure the smaller countries like Greece, Portugal, Ireland could be let to (mostly) solve their own problems. Is it too late for the bigger two countries, Italy and Spain?

    Both have new more conservative governments that seem to be taking things more seriously. Perhaps they’ll enact the austerity measures needed to get their finances under control. If it’s clear that any bailout will be no free lunch: much sacrifice will be the price of any such taxpayer “help” from Germany, Finland, The Netherlands, et al. Then their voters will better understand the folly of demonstrating in the streets, hoping for a better deal.

  • Kris

    [email protected]: You mean, what would it be like if European countries still had strong militaries?

    Hoo-boy, pass the popcorn.

  • At this point Greece will agree to anything. Just give them the tranche.

    Wouldn’t the better thing be to negotiate a bankruptcy, then put Greece out of the Eurozone? It looks inevitable to me.

  • Jacksonian Libertarian

    “But continuing austerity in Greece with no hope for an exit is not going to strengthen Greek democracy. And there are signs — in Romania, Slovakia, Hungary and elsewhere — that democratic culture and institutions in a number of EU states are weak.”
    It seems these cultures have yet to learn their lessons, and will have to go back to school.
    “Example is the school of mankind, and they will learn at no other.” Edmund Burke

  • Russ

    Giving Greece the tranche solves nothing, since said money immediately goes to German and French banks, banks which pointedly failed to do their due diligence, as half the EU failed its debt targets year after year after year.

    Default will hurt the Greeks, and maybe some unsavory folks will come out to play as they have in Greece’s past — but it certainly beats all the imposed austerity, which does nothing but service debt to others without actually erasing the mark.

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