Euro Update: The Euro is “An Unbridled Doomsday Machine”

Though markets have calmed a bit, the desperate search for a lever that will actually steer Europe away from the looming wall of a EuroCrash continues. Meanwhile, certain repeating motifs are detected:

  • “Now that times are bad, the single currency has turned into an unbridled doomsday machine. Merkel continues to insist that she’ll do whatever it takes to save Europe’s “destiny”. The continued insistence on fiscal austerity and debt repayment tells a different story. Is Germany really prepared to bankroll a wider monetary union by putting its money where its mouth is, or is the game finally up?”
  • Boris Johnson also calls the Euro a Doomsday Machine:

    Europe now has the lowest growth of any region in the world. We have already wasted years in trying to control this sickness in the euro, and we are saving the cancer and killing the patient. We have blighted countless lives and lost countless jobs by kidding ourselves that the answer to the crisis might be “more Europe”. And all for what? To salvage the prestige of the European Project, and to spare the egos of those who were wrong and muddle-headed enough to campaign for the euro.

    Johnson is right about the cancer, but slightly wrong about the cause: The European cradle-to-grave welfare state is the cancer; the Euro just made it slightly more malignant.

    But with two separate commentator’s calling the Euro a Doomsday Machine, I feel a new meme coming on:

    Not to mention much better chances of being linked by Jonah Goldberg and James Lileks…

  • Europe is awakening from its Utopian dream.
  • Greece’s invisible bank run.
  • Greece is happy to stay in the Euro…as long as other countries are footing the bill. They want more subsidies and an end to even the #fakeausterity. Not only do they want to continue to dig their deficit spending grave, they insist on digging it as fast as possible. How to get Germany to agree to continue footing the bill is the one flaw in their otherwise cunning plan…
  • Why the Blue State model doesn’t work: Cheap money doesn’t mean welfare states balance their budgets, it just means they spend that much more:

    Greece, Spain, Ireland, Portugal and Italy (and California). In each case, the promise of more bailouts and a steady flow of cheap money only produced more reckless behavior, excessive levels of government spending and record levels of debt.

    Johan Norberg, a senior fellow at the Cato Institute, summarizes the results: “From 1997 to 2007, government expenditures increased by around 6 percent annually in Spain, Portugal and Greece, while population remained mostly stable. Spending increased by 4 percent a year in Italy — even while the economy shrank.”

    Consequently, “Between 2000 and 2010, Portugal increased its public debt as a share of GDP from 49 percent to 93 percent, France from 57 percent to 82 percent, Italy from 109 percent to 118 percent, and Greece from 103 percent to 145 percent,” reports Norberg.

  • Greece and California are headed down the same path to disaster, and for the same reason.
  • In addition to budget deficits, the EU suffers from a deficit of democracy:

    The European crisis is as much a crisis of politics as economics. The current paralysis of the Greek political system demonstrates the point very clearly. EU policy has actively contributed to this crisis by effectively sealing off discussion of the political problems thrown up by austerity.

    Budgetary policy is at the core of traditional democratic politics in Europe but the management of the euro zone is increasingly being effected not through democratic institutions but via a centralised and depoliticised form of technocratic fiat. The “stability” narrative has triumphed over the need for legitimacy as the crisis in Europe has deepened.

    Ivan Krastev, the eminent political scientist, argues that we have now arrived at a point where national governments have politics but are no longer in control of policy, including budgetary policy, which is moving via the fiscal treaty and other measures to the EU level.

    On the other side of this divide the European Union has policies but no politics, since decisions are increasingly being made by technocratic managers rather than directly elected representatives of the European public. The euro zone crisis has thus amplified an existing problem – the absence of both a European citizenry and a transparent European level political process.

  • A long meditation on what a Greek exit would mean involving Frankenstein, Old Maid, and David Brin.
  • The EU sends inspectors to find out why Spain’s deficits are so high. Offhand I would say the solution to the mystery might be “because they’re spending more money than they’re taking in.” Obviously such thinking will never get you anywhere in the EU civil service…
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    One Response to “Euro Update: The Euro is “An Unbridled Doomsday Machine””

    1. Gregg in Austin says:

      Just a note to let you know that although I have never commented, I do regularly read your blog. It is the best right-of-center news aggregator in these parts. Thanks.

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