Dr. Frankenstein’s Europe; (free subscription required)
The European Monetary Union was a triumph of hope over reason, pieced together from very dissimilar countries which, while sharing common borders, have very different cultures and economies. That it would eventually face an existential crisis was foretold by numerous critics at the time of its creation. The euro has never been a real currency. It was and still is an experiment, fashioned and shaped by a generation with noble ideas and vision, but tied together by an unworkable structure. Can its foundation be reworked into a solid structure? Or will natural centrifugal forces pull it apart? The difficulties that are faced are somewhat akin to fixing the engine of a jet plane while it is flying at 30,000 feet.In today's letter we explore the options that the eurozone faces in order to stay together, and what it all means for some of the countries involved. While I have written for a very long time about the probability of Greece exiting the eurozone, the actuality is fraught with risk, not just for Europe but for the world economy. What happens in the next few months will impact us all for a very long time. Indeed, this is one of those years, as Lenin noted, when decades happen. There is a lot to cover, and in future weeks we will go into more detail, but today let's just step back and see if we can get the larger picture.
And....The chief executive of the multi-billion pound Lloyd's of London has publicly admitted that the world's leading insurance market is prepared for a collapse in the single currency and has reduced its exposure "as much as possible" to the crisis-ridden continent.
[Home Secretary] Theresa May’s suggestion that Britain could suspend the free movement of people in the event of a Eurozone break up is a reminder of just how transformative an event the falling apart of the single currency would be.
h/t Maz2 & EBD
Quebec should expect a massive influx from France.
And TROC, a similar infestation from Britain.
A population of 50 million within a year or two is not unreasonable.
Socialism is a philosophy of failure, the creed of ignorance, and the gospel of envy, its inherent virtue is the equal sharing of misery.
Winston Churchill
We are asking the nations of Europe between whom rivers of blood have flowed to forget the feuds of a thousand years.
Winston Churchill
Read more at http://www.brainyquote.com/quotes/authors/w/winston_churchill_8.html#oXx4HddE5Jge9jZi.99
Europe is eternal - it survived the Romans, Visigoths, Huns, Tartars, 2 caliphates , inquisition, Hitler and now this central baking cabal.
Someone please send Mulcair over to watch the collapse and witness the failure of Socialist greed and kleptonomics.
IF a lot of people show up at our door. Lets send the ones with the socialist disease. They will just try to repeat a similar disaster. Leftist never learn, never admit they are wrong no matter what evidence is produced.
Agreed on above. Maybe democracy will return to these countries, at least until the 3rd caliphate is established, and then Europeans will have another fight on their hands.
Why wouldn't the Euro fail? The citizens of the poorest members are having a run on the banks. No-one wants to wait around while their Euros are exchanged for for Drachmas. Now Europe will not only have to support the Greek government, it will have to support the Greek banks that are essentially insolvent. They probably are bankrolling them already. Germany isn't going to keep the Euro afloat past the next election.
All the vested interests who have the most to lose by Greece leaving are launching a PR campaign of 'end of times' scale. Euros should be more concerned about Germany. As Germans assess their options I am sure the idea of their leaving and partnering with the Russians has to be considered. What a sad commentary if the Communist were considered more reliable partners than the other EU members.
Perhaps the shock of letting Greece go and suffer the consequences of their past actions will force the populations in Spain and Italy to accept fiscal realities. Unfortunately the bunch who believe that more debt equates to a resolution seem to hold sway. Fighting in the streets of Athens might change their attitudes. I do not hold out much hope.
Canada is not much different than those in the EU. Many provinces, Quebec and the MAritimes, lets not forget Manitoba, have fed at the equalization trough for decades. This farce has simply been enabled by the wealth of the country. When international demand for our commodities decreases all this will be thrown into question. Now that Ontario is drawing UIC that time draws near. Provincial debt in Ont & Que now exceeds the debt in Ottawa. Do you think that Finance Ministers in BC, AB, and SK are running similiar models the Germans are? Some how I doubt it but they certainly should.
Occam at 10.16 Didn't realize when I made a pie that I was part of a baking cabal.
We've a tradition of accepting waves of immigrants fleeing a common specific circumstance. Let Europe's business class be no different.
And for anyone interested in Eu-Canada trade information, here's a good link from our bureaucracy.
It was just a matter of time before the EU experiment failed. Now comes the preparations for the blowback on the economic, societal and political fronts.
We have already seen the flow of capital leave the infected regions, expect that to increase while the wealthy try to find safe haven for their investments. And expect the dwindling number of willing countries to limit the transfers as they try to sustain value of their own currencies to manage their economies.
We have already seen the riots and violence in the streets as austerity measures are put in place. Expect it to continue and escalate as fringe groups feed hate and lay blame, pointing fingers at demographic minorities as the 'ones at fault' from the influx of multicultural immigration policies. Expect tens of thousands of people who have pissed their lives away on expected handouts and protection from government try frantically to move to regions that can care for them as they can no longer take care of themselves. Nations with liberal social programs can expect massive upticks as these immigrants try to gain citizenship.
We have already seen a steady movement away from political involvement as people lose faith in their leaders and institutions. Watch as the masses withdraw from their nations politics, no longer believing in and abandoning the system to the extreme, right and left agenda-ists. Center politics will dissolve as the fight for power goes to whatever group can gain populist appeal.
History repeats, even if people turn a blind eye to it.
Mostly the Euro union thing was built around the premise that a single large bloc could be guided to act as an economic powerhouse.
It could have worked ... if not for the underlying and ingrained disease of socialism that infects the political class at all levels and the belief in entitlement among the general public.
Europe is a threat to North America ... they are not allies in any sense and we need to keep them in that regard.
1) Food for thought, could we not use an influx of Europeans, those who can afford to leave? Not necessarily a bad thing for doing a rebalance. Just make sure its those that are seeking to flee socialist checkens coming home to roost and not a spread of the contagion.
2) That companies are buttoning up for the storm is good, makes surviving it more likely and therefore makes it more likely to happen.
3) Three results, one is that Europe somehow drives to a single state to save itself. Germans cant go there. Two, Greeks and other bad apples are booted out. Looked likely but this is where people are concerned about result. Third, Germany leaves the sinking ship, Germany can survive on its own, and the this allows the Euro, whatever is left of it, to survive and adjust. ENd of the day there are at ;east two currencies in Europe without a complete Federal Union, north and South. Unleash the DMark and let the Euro find its own level, the French will pay the biggest price and likely reap the biggest rewards through increased exports in the long run.
If Option 3 then expect to see the Scandanavian and Blatic countries leave as well. YOu may see a "Luther" currency in Europe. (Germany, FInaland, Sweden, Norway, Denmmark, Netherlands)
A free Trade Agreement without a single currency, but no need for 14 currencies either. The faster they get it done the faster they, and the rest of us, come out of the problem.
"Britain could suspend the free movement of people in the event of a Eurozone break up..."
Yeah, no kidding. Because otherwise hordes of foreigners will be walking through the Chunnel pushing baby carriages full of heirlooms, showing up on the beach at Dover in rowboats, it'll be a flood.
I foresee the death march making a return to the government policy toolkit in Europe.
The Euro was a project spurred by the undying German desire to dominate Europe. France willingly accepted being the #2 in this arrangement, as it meant a huge increase in their influence. The other national leaders that went along throughout Europe did so with the hope of getting something - economic growth - for nothing.
They completely ignored the hazard of being tied into a common monetary policy that may not be optimal for their nations.
Just another example of the self-destruction of Europe.
Home Secretary May might want to read up on her EU Overlords' laws. What she has proposed would seem to be in violation thereof. And as long as the EU exists, THEIR laws trump those of Mere Countries...
Mark,
This is true yet in the event of a crisis who's going to enforce anything. A Euro court means squat without some kind of enforcement mechanism.
This kind of thing forces either a more integrated Europe, ie a Euro government with all the federal powers needed or it forces the whole construct to fall apart.
Middle zone is unsustainable as we are seeing. And right now, who really wants to join the Euro project, because the current example is not good.
The Brits wont joing, the Germans, Dutch Austrians and Finns may all leave. I am not sure the French will be all that happy when they are left holding "le sac"
This reminds me of the sentiment immediately before the tech bubble bursting. Many knew it was inevitable as there was no underlying value for most of those tech stocks and yet there was shock and surprise when it happened. Milton Friedman predicted the failure of the euro at the onset of the European monetary union.
The same situation exists in most of the developed world. The US is broke. In Canada, the two most populated provinces are broke. Japan is a bug in search of a windshield (Mauldin). The European banking system is over-leveraged with junk paper......
The entire Western world is at a crossroads with recession inevitable regardless of path taken. Thrift versus continuing to enlarge a suicidal credit bubble are the only real alternatives. The former will yield a shorter recession before correcting while the later will inevitably lead to economic and civil carnage on a global scale.
In a world of dumbed-down, entitled, left-liberal cultured human ballast one might want to hedge their bets on a happy outcome. Who is John Galt?
Stephen, interesting thoughts.
There is indeed likely to be some emigration, much of it to the further disadvantage of Europe. In a sense it's been going on for 20 years through industrial expansion outside Europe by the big multinationals.
With respect to your third point, Germany may survive on its own, but not well and not easily. The end of the Euro will lead to a large increase in the value of a new German Deutschmark, making Germany's products increasingly unaffordable to its customers. This brings on a new industrial recession for them.
An anecdotal story about what is wrong with Europe. I spoke to my European cousin who was pining for retirement. Since he had been unemployed for over ten years I asked him what would change....
When the inevitable recession works its way into western Canada you will see Canada become Balkanized just as much as Europe.
The debt deleverage in Europe will become global soon.
Well, Well.....
It would appear that a bunch of beaurocrats with a socialist bent may have accomoplished in a few short years, what generations of WAR in Europe could not.
Buildings may still be standing, but it's clear that Europe is on the way to collapse for many of the inhabitants.
Apparently, when Maggie Thatcher gave the warning....someone should have listened.