While people across the globe wonder if the Euro will survive, I wonder if Europe itself will. I doubt so, unless it goes on a crash diet. Not much chance of that as long as the Fed is there to restock the buffet. Though the markets love the illusion of weight loss without diet or exercise, the underlying medical issues remain unimaginably dangerous. Europe is close to a coronary.
We have seen already how irked Greeks get when their public sector diet starts looking like Jenny Craig went on a rampage. I actually don’t blame them completely. The politicians who knowingly promised unlimited desserts to their constituents bear the lion’s share of the blame for their feeling starved. This is relative, of course. After a period of lean years, plain and modest portions look filling. After years of gorging, anything without a side of caviar looks meager.
Seventeen countries with widely varying backgrounds decided that becoming one economically was a good idea. Actually, feather-brained bureaucrats came up with the idea and foisted it on a gullible public. No one bothered to anticipate what would happen when a recession threatened to pull the legs out from under the table. Profligate countries have been able to dine like royalty for years by borrowing money at the same interest rates as sounder ones. They got themselves in trouble (Greece being a good example) and now expect to be able to keep their lavish public sector cuisine courtesy of their leaner and more prudent fellows.
It is unlikely in the extreme that any of the countries now facing default will change their dietary habits unless forced to. We have seen just how far Greece is willing to push the issue to avoid austerity. They called the rest of the world’s bluff and the US blinked. Now what?
First, the Euro might make it for a while longer now. Unfortunately, much depends on doing more of what is not working now–making Europe behave like one country. Doing so will require central control over the budgets of individual countries. I cannot imagine any near-default nation agreeing to such unless total destruction were the only alternative. I also cannot imagine a sounder country agreeing to be tied even more closely with those that are causing problems now. This one will be interesting.
After things settle back down, the same monster now lurking under the table will still be licking its chops. Europe, or for that matter any other place on the planet, can survive much longer under the socialist model of governance. High-minded Americans have for years longed for bohemian cafes, finger food, and a social safety net as they developed a snooty contempt for commerce. Were I more confident of their ability to learn, I would think them wiser now. I am not and I do not.
And please don’t try to tell me this is not really socialism. It is precisely that, labeled as “the welfare state” and packaged to look like tofu instead of a Twinkie. It is adored by the naive in the hopes of health and long life without ever having to say no to sugar. It is despised by anyone who bothers to find out the real ingredients.
The solution is for someone to put government on a crash diet. I would prefer it start with the US, though judging from the harem of harlots running for President, I am not hopeful. Soon we will be facing the same predicament as Europe, having ignored the lessons from our counterparts across the Atlantic. Life after that will be thin indeed.