It is truly heartening to hear somebody who embraced one of the worst policy mistakes of the past half-century to finally see the light. It makes one almost believe in progress:
“All my life I've been a Europhile.”
“Through all the vicissitudes of mid-night negotiations, I admired the dedication and vision of the negotiators who were building the European Union. I believed in the vision of a united Europe and welcomed the advent of the Euro as a major step along the way. When the recent crisis first broke three years ago, I welcomed it, thinking that surely it would be a catalyst for Europe to move to full financial integration and to greater political integration on the way toward realizing the vision of a truly united Europe.
I was wrong, and I have come to realize that my dream of a united Europe a la the United States, is not the European dream. Indeed, with great disappointment I have at last concluded that there is no European dream because a las those whom we on the outside call Europeans are not and don't want to be Europeans.”
While I am a great believer in ‘free market ideology’, I do recognize that one of the biggest weaknesses of modern economic theory is that it treats human beings as fungible quantities, who are no more than the sum of their quantifiable appetites (“homo economicus”). Meanwhile, in the real world, among their many recalcitrant qualities, human beings are fundamentally tribal in nature. It is folly to think that the EU bureaucrats in Brussels could wash all that history down the drain. It is not an insignificant fact that the people dictating the terms of austerity to the Greeks occupied their country in World War II. Speaking of whom:
“The Germans were firm in their conviction that the primary cause of the EU crisis is the laziness, profligacy, free rider attitude, and mendacity of the so called Peripheral Countries ( Spain, Portugal, Ireland, Italy, Greece, and even maybe France), especially Greece, Portugal, and Spain.”
Nothing like a one-size-fits-all solution to exacerbate ethnic tensions! The great genius of former British colonies like Canada and the US is the federal system, whereby governance is pushed to the lowest level of government possible. And even then, the US ended up fighting a civil war over issues too deep to reach agreement on.
“Did they [i.e. the Germans] realize that the German banks had been major lenders to and facilitators of the peripheral real estate bubbles whose collapse precipitated the crisis? Again, yes, but only in a kind of theoretical way. There was clearly no conviction that that was a primary cause of the problem or that keeping the German banks whole might have been an on-going drag on the recovery of the peripheral countries. Was there any understanding that for Germany the Euro is actually undervalued (compared to what a free standing Deutsch Mark would be valued at) and that much of Germany's export success is due to that? Absolutely not. No, Germany's success was seen as entirely due to hard work and financial virtue.”
Both explanations are correct. But the first one – German mercantilism – gets less press, perhaps because the concept of mercantilism is harder to understand than a lazy, corrupt Greek bureaucrat. It is often forgotten that Adam Smith’s A Wealth of Nations was not meant a defence of the free market but rather as an attack on mercantilism. What Smith did theoretically, the EU is currently demonstrating in practice.
“The Greek situation is truly a vicious circle. Austerity has led to dramatic shrinkage of the Greek economy which means that the debt as a percent of GDP is actually climbing rapidly despite the loans and other measures that have been taken in an effort to relieve and re-generate the Greek economy. The Greek situation is getting worse, not better.”
Yup. That’s what a bad monetary system will do: create a lose-lose situation.
“Everyone at the weekend meeting which included International Monetary Fund head Christine LaGarde knew and knows that the half measures agreed upon will not be enough.”
Everybody knows this. The trouble is, most people with the power to do something about it are afraid to face the solution.
“Everyone knows that there will have to be debt relief for Greece somewhere along the way. But German politics don't allow Merkel to face that reality right now.”
German politics... And the German banks that loaned all that money to the Greeks. Too bad they gave the Greeks so many bailouts. If they hadn’t, there wouldn’t be so many bad Greek loans on German books right now.
“The UK has always run hot and cold on Europe. At the present moment, it is running perhaps colder than ever in the past. Prime Minister David Cameron and his ruling coalition only want to be part of the EU as long as it leaves the UK more or less completely autonomous without having to pay any costs or having to accept any regulations. The betting among my sources is that the UK will be out of the EU within a couple of years.”
Three cheers for the UKIP!
“As for the French, along with the Germans the main historical drivers of the EU, they now seem bent on doing everything possible to turn France into a true Peripheral country.”
That’s what you get when you vote socialist. Paging Barack Obama.