Wednesday, July 4, 2012

THE PRAIRIE EDITOR: Europe Delays Its Day Of Reckoning --- Again!

Chancellor Merkel of Germany has been trying to assert some common sense
into the current European economic crisis by putting a halt to the bailout of
debt-laden Eurozone national economies. Up until now, of course, she has
willingly joined in on these practices, even as German voters, living in
Europe's strongest economy, have increasingly resented paying for the
continued bad fiscal practices of the other Eurozone nations which have
accelerated the crisis to begin with. These practices include the decades-long
accumulated costs of unsupportable national entitlements of shorter and
shorter work weeks, early retirements, growing pension fund liabilities,
indefinite unemployment benefits, rising national health care costs, recent
housing bubbles in some member nations, and, in some cases, chronic tax
avoidance. Germany's economy has its problems, too, but Germans feel they
work hard, pay their taxes, and try to manage their entitlement programs with
some restraint. German re-unification has been painful and expensive, and most
Germans, in their attitudes to the rest of Europe, have been sensitive to the fact
that, seventy years ago, a depraved German Nazi regime almost destroyed the
continent with unspeakable aggression, plunder and murder.

German guilt, and its sense of responsibility to its European neighbors,
however, has limits, and German voters, most of whom were not even born
during the infamous Nazi regime, are understandably beginning to wonder if
its unilateral burden will ever end.

The leaders of Italy and France essentially "blackmailed" Frau Merkel into
reversing her decision to stop the bailouts, and one more time, a stopgap
"plan" has been put into place to stave off the day of European reckoning.
A new and inexperienced conservative prime minister in Spain, and a
disappointingly weak conservative prime prime minister in Great Britain,
have gone along, having their own hands full with local economic problems.
Troubled economies in Greece and Portugal are doing nothing really to correct
their own problems.

Having begun various programs of austerity, European leaders are now being
pressured to reverse themselves to promote "growth." In this case, the word
"growth" is a euphemism for repeating the old policies which have caused
the continental economic crisis. Its assumption is the discredited notion that
an economy can spend its way out of its problems while, at the same time,
increasing taxes on the rich.

Lest I be accused of simply pointing an American finger at the Europeans in
their time of crisis, I need to cite the unfortunate role of the American president,
Barack Obama, who has pressured the Europeans to adopt the "growth"
approach and reject austerity. Mr. Obama, of course, practices in the U.S. what
he preaches for Europe, and the result has been a lagging economy, high
unemployment, slow growth and general pessimism about a recovery that
does not ever seem to arrive. Mr. Obama's motive is also informed by his belief
that if the "growth" band-aid is not applied, the troubles of the European
economy could hurt his own chances for re-election by further depressing
American trade with Eurozone member nations.

This saga seems to go on indefinitely. The U.S. and world stock markets go up
with each bailout, and back down when it is soon enough realized that only
delay has happened. The politicians seem helpless to move out of this pattern.
The European Union was created, in large part, without the consent of the
governed. Perhaps it will be the "governed" who will have to take the first steps
to put Europe, in whatever form it will eventually take, back on its feet.

Copyright (c) 2012 by barry Casselman.  All rights reserved.

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