Bread and Circuses

Given our ancestors all hail from the same sunny bit of Pete Moss, and the direction the current administration in DC is itching to push us towards (see bailouts of CA on the horizon, Obama care, etc), I thought this quite relevant.

From The Financial Times online:
“Tell me how this ends,” was the question posed by General David Petraeus about the Iraq war. European leaders are asking the same question as they contemplate the crisis in the eurozone.

Having failed to construct a firebreak in Greece, the Europeans are hoping that they can stop the euro crisis in Ireland. But, even as an Irish rescue package is put together, the bond markets are already looking with unhealthy interest at Portugal. After Portugal, Spain is assumed to be next. And, if a really big economy such as Spain needed to call the financial fire brigade, the whole future of the euro would be in serious peril.

The question of “how this ends” is therefore obvious and urgent – but also fiendishly difficult to answer. It is like watching a three-dimensional game of chess – in which the financial, economic and political levels all interact with each other.

My current best guess is that the single currency will indeed eventually break up – and that the euro’s executioner will be Germany, the most powerful country and economy inside the European Union.

The headline on one of the most-read stories in the Financial Times last week was “Anger at Germany boils over” – reporting accusations by some Europeans that the latest twist in the euro crisis had been triggered by inflexible German policies.

But Germans themselves have plenty of reasons to be cross about the way the single currency is developing. Their country has been through a painful decade of wage restraint and cuts in government services. Many voters are outraged that their tax-euros might be used to finance early retirement for Greeks, or Ireland’s super-low corporate tax.

The German people were also promised that the euro would be as stable as the Deutschmark – and that there would be a “no bail-out clause” that would prevent the richer countries in Europe having to save the indigent. Both promises look perilously close to being violated. That, in turn, is triggering growing concern that Germany’s constitutional court could declare their government’s participation in European “bail-outs” illegal.

The German government’s fear of its own constitutional court has already been a crucial driver of the crisis. This year, the Germans were accused of acting far too slowly to organise a rescue for Greece. But official sloth was driven by a fear that speedy action would be deemed to violate the European treaties.

The immediate crisis in Ireland was triggered about a month ago when Angela Merkel suggested that, in future euro crises, private bondholders should bear more of the losses and that further European treaty changes were needed. This remark was also made under pressure from the courts.

Germany’s actions have, in turn, created political and legal pressures in bail-out nations. In Greece, we have seen deadly riots in Athens and a senior government minister evoking the Nazi occupation of the 1940s. In Ireland, there is much lamentation about the threat to national sovereignty. on Monday, the government itself was wobbling.

It is possible that the rise of nationalist and anti-capitalist parties such as Ireland’s Sinn Féin will cause recipient countries to stick two fingers up to the EU – and to see whether life might be better outside the single currency ..."

That shouldn't trouble anyone - either Germany will be the last man standing in a fiscal blood bath, or the European Continent will need to create a "fiscal union", in which Germany will be the bank of Europe, with abilities to dictate the way the EU Parliament does now. I can tell you this, Germans are sorta big on national identity, they were never big on this whole continental, we're all the same, union thing. So it's little wonder that in either scenario, they win. I wonder how Russia feels about that.

As for "our island", sadly it would seem that only a few years ago Ireland was "the" place in Europe to do business - low tax rates, limited corporate red tape, a strong currency, the list goes on. But since joining the EU and accepting the Euro they have tumbled, mightily. Taking on a lavish welfare role amid their success (what is this, Celtic "guilt?"), combined with EU membership has seen them off to the land of bailouts ... and a loss of democracy?

This 3 minute 30 second closing argument by a UK MP in the EU Parliament, Nigel Farrage, explains in exquisite fashion the dominoes lined up to fall in Europe and the consequences of collectivism for Ireland and the Continent; and I must say, there are excruciatingly obvious parallels and lessons to be heeded from the relationship between the member states of Europe and a centralized, collectivist government, and the member States of ours united here in America and our current federal authority.