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Monday, July 30, 2012

Europe's Economy is in Trouble

The Euro, a monetary experiment of long planning, seems to be crumbling.  As we speak, the southern European countries, often referred to as 'PIIGS' (Portugal, Italy, Ireland, Greece and Spain) are underwater in debt.  The Euro plan, long in the making, may already be at its end.  The carefully laid plans of Jean Monnet and Raymond Fosdick have fallen apart.  The Establishment decreed that the European Union would use a fiat, paper currency called 'The Euro', and this would create a smooth trade process, and it would be economically beneficial.  It has been a disaster.

I remember hearing about the Euro in the late '90's.  All of the rhetoric was how it would make things better for Europe, and how 'efficient' the trading of the Eurozone would be.  The European Central Bank would be in the background, at the levers, centrally controlling things, never allowing things to get too bad or too good.

How did it go horribly wrong?

The southern European countries have tended toward Socialist style economies.  There are stories about exceedingly early retirements, pensions for all, hazard pay for hairdressers - it's a long list.  These ideas are economically unfeasible.  You can't create something from nothing.  The 'money' used to fund these things is created from nothing, and it is borrowed via the floating of bonds.  The northern European countries, even with their tendency toward Big Government, have less poor economies and a different mindset when it comes to work and retirement.  The most noteworthy  of these countries is Germany, which actually manufactures products and provides services.

Germany and the European Central Bank have been continually asked to bail out the southern European countries.  Greece and Spain are so far in debt, basically at a level to be considered hopeless. The elephant in the room is that large banks in Europe have large amounts of exposure to the explosive levels of debt.  These banks have huge amounts of economic and political clout, and they will not go gently into that goodnight.

As usual, note the questions that are not asked.  Why use a fiat currency?  Would a gold backed currency be a better choice?  Why should the economies of Europe be 'linked' in the first place?  There were people who predicted that this economic monstrosity would be a failure.  They were called crackpots then, they're being called crackpots now by The Establishment.  A good sociological experiment might be finding out how seriously wrong The Powers That Be have to be before the people lose faith in the Planners.

Here, Nigel Farage explains the the farcical nature of massive, interlocking indebtedness.  When the EUR implodes, the people laughing in the background will not be 'available for comment'.




Recommended reading: "Fiat Money and Collective Corruption."

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