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Bye-bye to the euro? — 30 Comments

  1. Last night Michal Savage was talking about how the harder working Germans are being screwed to help the lazy Mediterraneans.

  2. I think Jeff Randall misses the point. Perhaps the Euro IS doomed, but not because of 16 disparate economies. After all, In the U.S., we have 50 disparate economies as unsuccessful California and Michigan, and as successful as Texas and North Dakota. This, in itself, doesn’t endanger the value or success of the dollar

    The Euro problem lies in the unwillingness of EU members to accept a central authority. Imagine, if you will, Little Italy, Chinatown, Haarlem and the Upper West Side in New York City all trying to use a common currency while maintaining a unique and distinct identity and refusing any hegemony.

  3. Correction: not so much refusing any hegemony, but actively battling against the fact that one of the members will always want to rule the others.

  4. Its a Marxist economc system that sought to make countries that are not equal act as if they are. same thing we do here with people that doesnt work either.

    the universe is not homogeneous, and until it is again, all balled up in the largest singularity since the big bang, that ideal is an ingredient that makes all recipes containing it, fail.

    MARXISM tries to make the sets theory of what we think and how we think, be reality, not be a representation of reality we model that way.

    as with agw and other things they are so full of themselves that they think their thoughts and the mechanics of such to make it possible ARE reality external to themselves.

    they think that we will share a common reality once we share the same thoughts. not that we all haev different thoughts and ideas about reality because our own limitations of existence means we are not omnipresent and so cant all experience all of the common reality and so make the same end conclusion.

    they have a more magical and religious view than any religious person after the enlightenment. they see reality as sympathetic to their thoughts and that if we all pray the same prayer, it will happen.

    the idea of a reality that has no regard, care or consideration for them, as they do do their fellow man is the ultimate scary thing to them.

    now this is not true of the core leadership, who sees the common things that such people see in seeking power, being sociopaths, and wishing to beat out merit while at the same time, their mental disease prevents such merit.

    they empower their followers by making them weak and telling them that if they all think the same, they can make a difference (magically)…

    while the alternative line from the conservatives is… you are naked and alone, nothing you think will make a difference unless it moves you to action, and even then, you only get to try, not succeed unless you do.

    given the choice, young people side with the brotherly fun and group idea of sitting around thinking the world into a better place..

    is it any wonder the dysfunctional can only see sitting around and praying or following the orders of someone else to shift responsibility and payment to them for their own goals, as a good thing?

    and that those who are not dysfunctional do not see how or why sitting on your duff, or listening to someone else use you will get you a security, and outcome, and better life that you crave so much that you sell yourself to the first person professing magic beans…

  5. By the way… way way back i was saying that the currencies are going to go wacko… remember i said that hyperinflation is on the way given the quantity of the money they printed…

    tick tick tick…

    opinion has no real effect does it?

  6. The Euros didn’t have progressives at the helm so they didn’t experience a great depression similar to ours.

    They have had incredible inflation. 🙂

    So the roles are reversing in this crisis (ie, I think we will get hit with inflation soon).

    But the actions taken (at least those in good faith) were to similar to that saying about the army… always training to refight the last war.

  7. Getting rid of the Euro would certainly be the rational and most productive action – in the medium to long term. For that reason, they probably won’t get rid of it for a while. Delusions are very, very hard to end. The people with the delusions have power and have invested their whole life in the delusion. They give up the delusion with great pain.

    The alternate scenario – which is less rational, but more sustainable than what they have been doing – is to have European central bank print money and buy some of the debts of all of the sovereign countries. That would inflate the entire system. This would cause wages and the general economy to rise much faster in Germany than in Greece, thus rebalancing the system.

    The Germans will squeal at having their currency devalued, but the only other choice will involve letting Greece leave the EU, which will mean that German banks will lose all of their capital and have to be bailed out by the German government. That process has a rational conclusion, but is too scary – so the Germans will let ECB inflate instead.

    Its true that Germany is getting the short end of the stick on this. But Germany also runs a trade surplus with Greece, and German banks loaned the money to the Greeks to fund their deficit. So they are in bed with the Greeks whether they like it or not.

    James

  8. The Germans will squeal at having their currency devalued

    Expat can speak to this authoritatively, but I suspect “squeal” would be the understatement of the millennium for the Germans’ reaction to inflation. No people on earth more viscerally oppose inflation than the Germans. I bet Germany would leave the EU first. Expat, what think ye?

  9. “No people on earth more viscerally oppose inflation than the Germans.”
    Especially if this inflation was caused or imposed by foreigners, whom they despised.

  10. I don’t know. The people might just stick their heads in the sand and elect the Left Party. I’m sure they will scream loudly, but where the reaction leads is up in the air. German exporters would be seriously hurt by dropping out of the Euro if the rest of the EU got POd and stopped buying German. And then there are all the multinationals like EADS (Airbus) to consider. I’ll take a Yogi Berra pass on this: “It’s tough to make predictions, especially about the future.”

  11. This whole mess is liable to be the most entertaining thing to come out of Europe since WWII. I’m looking forward to next week’s episode of “Gone With the Wind-European Release”.

    Didn’t the Germans have a tinsy problem with inflation and its ramifications some time back?

    “As for the United Kingdom, we must be grateful that those frightfully clever Europhiles, such as Lord Mandelson and Kenneth Clarke, did not get their way. Had they been able to scrap the pound and embrace the euro this country would be even closer to ruin.”

    The English missed a chance to damage their country, these are indeed wondrous times.

  12. From Melanie Phillips:
    “It’s not actually Europe that would fail. The countries sharing the continent of Europe could continue very happily to trade and ally with each other. What might now fail is the hubristic and anti-democratic project for an EU superstate, hoist by its own monetary petard.

    Bring it on. “

  13. Especially if this inflation was caused or imposed by foreigners, whom they despised.

    given history, i there any other kind to them?

  14. Update: Germany has passed its rescue package. They will put up 123 billion Euros now, and increase this to a total of 148 later. Naturally, the nongoverning parties are taking pot shots at Merkel.
    Also the EU ministers and the Central Bank have agreed on stronger sanctions against countries that don’t meet budget criteria. Interestingly, they are talking about financial and nonfinancial sanctions. Details will be worked out at several meetings this summer. One item they discussed was taking away EU voting rights from offenders for one year, although some EU people say this would mean changing the Lisbon treaty.

    Personal note: I just had dinner at our local Greek restaurant, and business seemed OK. I don’t know whether this means that there are no personal animosities toward Greece here or whether food is more important than finance.

  15. Once upon a time when I first went to Europe my guidebook was “Europe on Five Dollars a Day.” It worked. Worked like a charm. Worked even better during the period when the Franc was five, six, seven francs to the dollar.

    Perhaps those times will come again and tourists in the near future can look forward to the realm of ten Euros to the dollar.

  16. It’s looking like fiscal discipline goes the way of spiritual discipline in Europe and the states. Just locate the westerners who have shunned Christianity and you’ll mysteriously find red ink. Lots of it. Hmmmm

  17. EU nations back tougher sanctions to combat debt
    news.yahoo.com/s/ap/20100521/ap_on_bi_ge/eu_europe_financial_crisis

    Reminds me of several songs..

    Let her go down – Steel eye Span
    We will all go down together – Billy Joel

    not all the words, but parts…

    reading it, you get the idea that given what it hinges on, has about as much chance as a paper mache dog catching a steel cat he is chasing through hell.

    the reason is explained in a better idiom they use in Ky to cover it.

    They are caught between a rock and a hard place.

    If you are caught between a rock and a hard place, you are in a position where you have to choose between unpleasant alternatives, and your choice might cause you problems; you will not be able to satisfy everyone. (for those not familiar with the idiom)

    [sarcasm]No one ever told me that the calliope music i used to hear while watching the clowns would stop and this long drawn out clanking like the rail cars slowly going up a roller coaster would replace it….[/sarcasm]

  18. Europe’s problems are the direct result of several factors, all interrelated.

    The Euro is failing because socialism is based in the false societal premise that a few can indefinitely support many. The entitlement state will eventually bring down any political and economic system.

    Disparate cultures who do not speak the same language always remain… tribal and subconsciously suspicious of each other, thus the EU members reluctance to place central economic authority in Brussels or any single member.

    Without central taxing and financial authority, southern Europe’s ‘relaxed’ societies will never produce or save at the level of northern Europe’s tense, hard-working, thrifty societies (hard winters encourage “putting something away and, making hay while the sun shines”).

    Kicking Greece out of the EU won’t solve the problem. Spain, Portugal, Italy and Ireland are all headed down the same path as Greece. And even France, Britain and Germany are ‘bailing water’.

    Splitting up the EU won’t work either, “Things fall apart; the centre cannot hold”.

    If Germany goes its own way, a very real possibility, the central dream of a united Europe collapses.

    Which leads to Europe’s primary motivation in forming the European Union, avoidance of another continental war, but this time with nukes. Most Americans fail to appreciate the utter horror that thinking of even the possibility of another war on the continent, brings to Europeans.

    Since WWII the consensus has been that an economically and politically united Europe could avoid that fate and that nationalism was at the root of all their prior troubles.

    Capitalism always has its winners and losers and hard working, thrifty, ‘live-within-your-means societies have a powerful advantage over “we’ll get to it maé±ana” societies. When different languages with their inherent difficulties in communications are added to the mix of cultural differences, tribalism and nationalism invariably prevail.

    The idea that yet again, tribalism and its child nationalism are Europe’s unavoidable fate, must fill those in Europe, able to see the writing on the wall, with a fearful unease.

  19. Which leads to Europe’s primary motivation in forming the European Union, avoidance of another continental war, but this time with nukes.

    Certainly among Europe’s motivations, but others include French aspirations to lead the whole continent, and paradoxically the desire of other EU countries to bask in Germany’s reflected fiscal probity to lower their borrowing costs.

    The simple, obvious, sensible, and workable way to do that would have been to peg the weaker currencies to the D-Mark, so that approach didn’t stand a chance.

  20. Occam,

    I don’t dispute that your other motivations are present, only in the hierarchy of needs as motivation, might we disagree.

    France’s desire to ‘rule the roost’ status wise are beyond dispute but Brussels, et al are not moved by French ambition.

    So too with other countries wishing to ride upon Germany’s coattails, that doesn’t explain Germany’s prior willingness to support their ‘lazy’ cousins.

  21. Art, That article is good. One other problem Merkel has is dealing with her sister party, the CSU of Bavaria. Its current leader is a real social justice type who wants to punish the rich by taxing all financial transactions. Other countries and monetary unions turn this down (and of course going it alone would be disastrous for Frankfurt), but Seehofer wants to take the moral high road, even if it further limits Merkel’s remaining wiggle room.
    The Bavarians are a funny folk, still trying to retain a separate identity all these years after Bismarck and the Wilhelms. It is the richest of the Laender and has done a lot to encourage new industry and research. It also has the most effective education system. However, it closes its eyes to reality sometimes. It still clings to the Baroque and Romanticism and has added social justice to the mix. It is not the place I would want to count on to cover my back. In fact some of the issues it raises seem to involve more chest beating than anything because the feel they don’t get no respect. Shortly after I came to Germany, I was having coffee at a tourist attraction garden at Lake Constance. At the next table, a Lederhosen-clad Bavarian pulled out his hunting knife to cut his meat, although no one else seemed to have trouble with the restaurant cutlery. I can’t figure them out.

  22. Reading Orwell’s memoirs about Spanish Civil War, I wondered: how a nation with so total lack of self-discipline, reluctance to hard labour and widespread fatalism as everyday philosophy can ever get out of poverty? How it ever can be modernized except by facsism? These questions are still open.

  23. How it ever can be modernized except by facsism?

    Fascism wasn’t all that good at modernizing, nor was communism, socialism, or a ton of other top down state force entities.

    the easy way to modernize them is the one thing we cant do. get the players out of state that benefit from “total lack of self-discipline, reluctance to hard labour and widespread fatalism”.

    when this happens, people adapt what they find and can see and can learn works better. want to modernize fast, give people access to the rest of the world of ideas, give them capital, attack the dishonest (real dishonest not honest made dishonest by bad law) the criminal, and get the F out of the way.

    if you look at what successes there have been and carefully examine you will note that the state accidentally did something, that facilitated that, but the rest was a wash.

    usually what did it was exposure to technology and products (with trade being a key facilitator).

    russia didnt really modernize, germany did
    [talking relatively during their social experiment]

    this was not because fascism better facilitated the goal, its because fascism was a lighter millstone on the people. without fascism, aristocracy, or communism, the German people would have been in a very short while a huge economic force, but alas, one ingredient for that is capital. so the other accidental thing was Germany by belligerency removed the limit they had on capital.

    its like always having a hand break on and talking about how different ideas can make the car go faster or longer…. where you have soviets drain the oil and gas a tiny bit at a time as long as the engine keeps running, until it doesnt (then they sell the scrap, oil, gas)… the germans restricted gas tanks to never being more than half full, and all weird rules, but through luck, incompetence, they left enough slack that while not fully free to operate, it was free enough to seem very productive (but it was very focused to a minimal set of things rather than full economy). America at the time didn’t prevent or hold back oil, or gas, or like Russia, didn’t build roads (unlike germany), and so with nothing slowing them down, it supplied the rest of the world with what they wanted or needed. most people have no idea of the level of production and output that the US was capable of before, during, and right after the war

    the single easiest explanation that works in other areas is that they were free to maximize output. they had a few other advantages, but they were transitory. the one thing that worked when china tried it, and any country tried it, was leaving the people alone to seek profit and not take too much from them as they do it.

    [one advantage which is more key than most others was the judeo christian ethic which still makes us want honesty, and fair dealings (unlike other places who are often designated to things not ever being that way)]

  24. It is noteworthy that all european countries that are now in deep trouble are either Catholic or Orient Orthodox ones (Greece). Catholics and Orthodox are great in deep religious thinking, but fall short in educating masses in work ethics and self-discipline.

  25. It still clings to the Baroque and Romanticism and has added social justice to the mix. […] In fact some of the issues it raises seem to involve more chest beating than anything because the feel they don’t get no respect.

    Note to Merkel: keep a weather eye out on the beer halls. And this time keep an eye on those you send to keep an eye on the beer halls.

  26. “The surprise is that the leaders of Europe thought it would be a good idea in the first place to hitch all of their wagons together despite the wide disparities in economies, and not expect that something like this would happen some day.”
    —————–

    If I understand correctly, the purpose was two-fold:
    (1) Commit all economies to one currency, forcing an “all-for-one,one-for-all” mentality which would
    (2) Create a European economic powerhouse that could outperform the USA (since some European countries –notably France, but others share the feeling– are resentful that WE saved their bacon in WWII and still had a strong enough economy to outspend the USSR during the Cold War, causing the Russian Empire to collapse).

    There have been several articles lately about the EU being philosophically derived from the USSR; certainly the Marxist element of “separate the people from their history/ culture/ religion in order to shift their allegiance to the State” is being advanced among all the EU signatories.

    It remains my hope that “cultural tribalism” will reawaken in Europe, so that Germans want to be German but not EU-vians; and the French, Poles, Italians, Dutch, Spanish, and so on will feel likewise.

    We really NEED individual states in competition with each other as checks-and-balances against the accretion of global power — which is what the EU and the UN (and the World Court and the IMF and all the Climate Conferences and various trans-national companies) are working so hard to achieve. Apparently our Current Administration has a pro-global-governance bias, as well, which is why I believe they should all be voted OUT as soon as possible.

  27. ====================================
    > It was a cautionary tale I never forgot. What’s Europe’s excuse?

    Simple enough:

    It was a cautionary tale they never learned.
    ====================================

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