The EU Approaches Critical Mass

Arnold Ahlert is a former NY Post op-ed columnist currently contributing to JewishWorldReview.com, HumanEvents.com and CanadaFreePress.com. He may be reached at atahlert@comcast.net.


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Last week, a parade of events have set the stage for what may become one of the most volatile economic periods of the 21st century. On Wednesday, Germany, the linchpin nation of the European Union, had a disastrous bond auction, raising only $5.2 billion of the $8.1 billion it expected to raise. On Thursday, Portugal’s debt was reduced to junk status. On Friday, Italy’s borrowing costs soared again, reaching their highest levels since joining the EU. Belgium, which has been unable to form a government for 18 months, had its credit rating lowered from AA+ to AA. Spain, where the People’s Party will be forming a government in the coming weeks, may apply for international aid to maintain its solvency. In short, the EU is going to hell in a socialist hand basket.

Yet it is precisely the denial of that odious reality that prevents any real progress from taking place. It is a denial born of ideologically-inspired hubris, economic illiteracy, and an entitlement mentality that afflicts everyone from the top of the so-called economic food chain to the bottom. It began with the fantasy that nations with completely different cultural values could be yoked to a common currency, primarily for the purpose of preventing another World War. It was viewed as a way to prevent Germany from ever again becoming the dominant force in Europe.

It hasn’t worked. It is Germany that has blocked the European Central Bank’s (ECB) effort to make massive “eurobond” purchases from Europe’s debtor nations. Last Thursday, Chancellor Angela Merkel reiterated that the ECB was only responsible for monetary policy. This stance sets her apart from the rest of the EU leaders. They want the ECB to do what Ben Bernanke and the U.S. Federal Reserve have been doing: “quantitatively ease” their way out from under, by financing debt with more debt. This is the socialist-inspired “too big to fail” scheme that keeps the banks and markets afloat while they look for a soft landing. A soft landing that ostensibly gives debtor nations time to get their acts together, lower their debt-to-GDP ratios, and regain some measure of solvency.

Such a scheme brings us to the other end of the fiscal food chain. This is the end, in countries like Portugal, Ireland, Italy, Greece and Spain, affectionately known as the PIIGS of Europe, where the bottom end of the chain, aka the “little people,” will be forced to endure years of austerity in order to realize such a transformation.

It’s a transformation that has engendered chaos. In Italy, riots broke out earlier this month when the new government, led by technocrat Mario Monte, outlined reforms to dig that country out from under $2.6 trillion of national debt. In Greece, the latest of many riots occurred last Thursday when workers at the country’s largest power company, PPC, clashed with police. They don’t want to be tasked with collecting property taxes via electricity bills, in a country notorious for tax evasion. Yet Greece needs $10.7 billion by Christmas, or the country will run out of money. Furthermore, their newly-formed government has yet to agree on terms for a far larger bailout of $174 billion, necessary to maintain national solvency.

On the same day in Portugal, a major strike engineered by the nation’s two largest trade unions took place, due to public outrage over austerity measures there. Portugal needs $104 billion of bailout funds. In Spain on Saturday, thousands of demonstrators massed in Barcelona to participate in a planned anti-globalization rally. As a result, border controls made unnecessary by integration into the EU were reinstated to prevent outside agitators from entering the country. And in Britain, a public sector union strike is also scheduled for this coming Thursday, because the government is proposing to raise the retirement age and increase employee contributions to their pensions.

While the peoples’ anger seems justifiable, there is something missing. It is their inability to recognize that they are every bit as responsible for the current crisis as those they seek to blame for it. Ironically, both ends of the fiscal food chain have enabled each other’s demise. It was the massive amounts of credit issued by lending institutions at the top, who made billions of dollars by making easy credit available to the bottom end of the chain. It was the easy credit that enabled the socialist government spending sprees that quickly, but artificially, raised the living standards of people who were more than happy to live the good life, even if it was built on a mountain of accumulating debt. It is that debt that has now become unsustainable, putting both ends of the food chain on the brink of insolvency in the process.

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  • UCSPanther

    Approximately 10 years ago, Europe was the model of the Left.

    Now 10 years on, it is looking more and more likely that the Eurozone will shatter and the EU will be no more than a bitter memory, and the intrusive nanny-state that went hand-in-hand with the Eurozone will die with it.

    Despite the glamour, the EU is no more than a sinkhole that cost way too much money to run.

    • Herman Caintonette

      What you are seeing is a hostile takeover of Europe.

      • UCSPanther

        What you see is your model society swirling around the drain.

        Kiss Europe goodbye, commie. I know you are lamenting the fact that the world you once knew is dying.

  • Herman Caintonette

    AA: "Austerity measures make it difficult, if not impossible, for a country’s economy to grow."

    This is the economic reality conservatives have to come to grips with.

    • http://imataxpayertoo.wordpress.com kathy

      But isn't that what the average household has to come to grips with? If they overspend…they have to pull back until they can get their house in order. There's no way around it, in my opinion….we will have a time of extreme economical slow down while debt is being chipped away at. And that's only if Congress will stop the spending, which at this point, does not look likely. The markets will be crazy until the 2012 election decides which way our country is going.

      • Herman Caintonette

        In economic circles, it is called the paradox of austerity. Austerity causes a negative feedback loop, as best exemplified by the Great Depression. The solution is to tax the rich (who consume all they want as it is), and invest that money in infrastructure. More jobs means more consumption, which translates into more revenues.

        • Ken

          Typical Progressive thinking. Tax the "rich" to pay for there own follies!!! Tax the "rich" who are the job creators. I am so tired of the nonsense!!

    • NAHALKIDES

      Actually, this was the one thing that Ahlert got wrong, unless by "austerity measures" he meant increased taxation. Taxes and excessive government spending are what impedes economic growth; cutting government spending is GOOD. Hasn't Keynes been proven wrong often enough by experience (not that his idea of spending your way out of recession ever made any sense) so we can finally abandon this nonsense?

      • pagegl

        "Hasn't Keynes been proven wrong often enough by experience…?" No, the folks on the left will always believe that they are smarter than their predecessors and will be able to think of some way to make it work. See Einstein's definition of insanity.

    • stern

      Please ignore. This poster is a vile anti-Semite. By refusing to engage with it, we can deny it the light it craves and finally get its foul odour off these pages.

      On Nov 15, the following comment was posted on these pages by Herman Caintonette:

      “[Palestinians] deserve to have a state on the land that was stolen from them. If killing Jewish kids aids in this endeavor, morally speaking, they are legitimate targets. "By any means necessary," intoned Malcolm X.”

      • tanstaafl

        He was also crowing about a friend who didn't pay taxes and died before the IRS got wise. There is a large amount of moral bankruptcy in his posts.

  • http://imataxpayertoo.wordpress.com kathy

    So is it possible that in steps the Islamic money men with their no-interest loans to save the day? IF Europe will convert to Islam….

  • SHmuelHaLevi

    Just a thought…
    Germany tried several times to take Europe by war…
    Maybe, just maybe now they drove the rest of Europe into bankruptcy and in a while buy out what is left…?

  • Spider

    I am going to enjoy watching Marx-Ism / Socialism collapse in Europe (just like it did in the USSR). Although painful for many this will be a good thing in the long run – just like having a freeloading 40 year old finally kicked out of his Mom and Dads house.

  • StephenD

    Makes you wonder after some of the prophesies in the Book of Revelations regarding the re-emergence of the Roman Empire and along with it the pre-eminent role of Turkey with its influence surrounding Iran, Iraq and Syria. From what I recall there are 4 dominant realms of power in Europe which include England, France, Germany, and Italy. Seems like it is holding true thus far. For me then, I would expect to see Britain, France, Spain, Italy, Germany, Greece, Turkey, Syria, Egypt, Iraq and Iran eventually join together.
    I wonder where that would leave us.

    • tanstaafl

      Up a proverbial creek.

  • affirmative

    Just to inform you: National sovereignity is gone, say hello to the United States of Europe™, which officially exists now.

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