February 24, 2012

The Euro Crisis and the Decline of Europe

Posted by  Bio ↓ on Feb 24th, 2012 Comments ↓

Reuters news service reported on February 14, 2012 that the “rating agency Moody’s warned it may cut the Triple A rating of France, Britain, and Austria, and it downgraded six other European nations including Italy, Spain, and Portugal citing growing risks from European debt crisis.”
What appeared in 2008 as imminent European political integration is now in a state of disarray.  What seemed inconceivable just four-years ago – the idea that the European Union (EU) would devolve back into nation-states in part or as a whole — is now being seriously considered.  Greece, a member state of the EU and a member of the euro-zone, is now a candidate for ejection.
Decades of cradle-to-grave socialism, a short work week and long vacation periods for European Union workers have taken a toll on the treasuries of the nation states.  The good life lived in Europe without a thought of tomorrow has brought on these days of reckoning. Greece is an example of the limits of a European welfare state.
Yet, the European project of unifying non-communist Europe into a joint customs, common market, and ultimately a single currency succeeded beyond all expectations.  The nations that made up the EU gave up a portion of their sovereignty to join a competitive and effective market, and in the process 17 euro-zone European nations (Austria, Belgium, Cyprus, Estonia, Finland, France, Germany, Greece, Ireland, Italy, Luxembourg, Malta, Netherlands, Portugal, Slovakia, Slovenia, Spain) gave up their national currencies and adopted the euro.
German reunification in October 1990 prompted the French government to initiate a common European currency: the euro.  The French feared a large unified Germany would overwhelm its smaller economy and that of other European neighboring countries with smaller economies.  Therefore the French conditioned their acceptance of a unified Germany on Germany’s willingness to give up the Mark – its strong national currency and replace it with the euro.
Today, Germany is no longer in an accommodating mood, as The Telegraph reported on February 15, 2012: “German President Christian Wulff has accused the European Central Bank (ECB) of violating its treaty mandate with the mass purchase of southern European bonds.”  Wulff added, “I regard the huge buy-up of bonds of individual states by the ECB as legally and politically questionable. Article 123 of the Treaty on the EU’s workings prohibits the ECB from directly purchasing debt instruments, in order to safeguard the central bank’s independence.” Wulff was commenting on the ECB’s intervention in the Italian and Spanish bond markets this month, which he believes poses a threat to the monetary union and Europe’s financial system. Wulff’s comments are the clearest warning to date that Germany has reached the limits of self-sacrifice for Europe.
The French are in no position to get the EU out of its mess. On August 24, 2011, French Prime Minister Francois Fillon revised the government’s growth forecast for 2011 downwards to 1.75% from 2%, according to the news group Agence France Presse (AFP), saying the measures would trim next year’s public deficit to 4.5% of GDP.  PM Fillon added, “Our country cannot live beyond its means forever.” Earlier in August 2011, world markets were rocked by rumors that France might see its credit rating downgraded and that its banks were overexposed to the debts of weaker euro-zone countries.  Fillon contradicted President Nicolas Sarkozy’s assurances which hold that the French financial system is not at risk, by warning that “France had passed the debt tolerance threshold.”
The people of the European Union are undergoing a malaise which is a by-product of economic decline and political uncertainty.  Europeans after WWII ceased believing in God, and sought to live the “good life here and now” without regard for the future.  Muslim Immigrants from North Africa, Turkey and the Middle East flooded into Europe as post-war industrialization demanded cheap labor.  It changed the face of Europe, and its culture.  Americans paid for European defense, which enabled the Europeans to enjoy a most pleasant lifestyle of short work weeks, long and paid vacations on the French and Spanish Riviera.  European demography declined below replacement long before workers were no longer needed in the post-industrial age.
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