Euro – Quo Vadis? How much more punishment will Europeans take to defend the misconceived Euro currency? … The Eurozone is in crisis, and only bold reforms can tackle the root causes. In the following article, Wolfgang Kasper explains why we should be tuning the clock back to before the Maasstricht Treaty, and proposes that an understanding of institutional economics is crucial in order to comprehend the current politico- economic predicament. – Elgar Blog
Dominant Social Theme: Europe is doing fine and Brussels wouldn't have it any other way.
Free-Market Analysis: Another economist who was an early commentator on the euro-treaty has abandoned the idea of a currency union. The article is written by Wolfgang Kasper, and here is a short bio:
Wolfgang Kasper is emeritus Professor of Economics, University of New South Wales, Sydney, Australia. In the late 1960s and early 1970s, he worked for the German Council of Economic Advisors and published analytical work on early proposals by the European Commission to impose a unitary currency on nations of the (then) European Economic Community. He was the lead author of W. Kasper, M.E. Streit, P.J. Boettke, Institutional Economics – Property, Competition, Policies.
Kasper has apparently decided that the euro was a mistake and the EU was better off functioning as a trade organization than a currency union. We can't figure out if these sorts of recantations are sincere or if the people making them are only following fashion in order to avoid the professional consequences as the euro considers to sink toward oblivion. Here's more:
The economic and political landscape of the Eurozone is not pretty. In Spain and Ireland, people and banks own useless apartments and houses, which they built because they were misled by monetary signals telling them credit was easy.
Many others have lost their homes to foreclosures, and numerous banks are ailing under the weight of bad loans despite injections of government funds and official guarantees. Small and medium-size enterprises, once the backbone of economies from Portugal to Italy and Greece, face a punishing credit drought. Industrial plants get closed without notice. Local governments do not pay overdue invoices, ruining local suppliers. Eurozone unemployment mounts, often despite wage cuts. Unemployment has surpassed 19 million (more than 12% of the euro-area workforce) and is rising, as a new recession looms.
Embittered about the unexpected cutbacks in pensions, public welfare and other services, and frightened by increasingly harsh austerity and spreading poverty, street demonstrators from Lisbon to Athens are marching under red banners.
Private lenders – attracted by high interest rates on Greek government debt and trusting that the collective of Eurozone governments would guarantee the loans – found that an official decree had nullified part of their investments (by what was cynically called a ?haircut'). And savers, who deposited their funds in Eurozone banks, learnt during the recent Cyprus bank crisis that they, too, now have to fear EU-decreed ?haircuts', the part-confiscation of their bank accounts. Little wonder that Cypriots (and others) blame foreign politicians and suspect that sudden ukases from Brussels now make Euro bank deposits risky. Nationalist resentments and populist blame games are on the increase; the noble post-war aspiration to European integration is forgotten.
There is a fair chance that a new political party – the Alternative for Germany, which advocates Germany's exit from the dysfunctional Euro – will sit in the next Berlin parliament, possibly making stable government there as elusive as it is in Rome. After all, Germany, too, is drifting increasingly into indebteness in order to bail out less creditworthy governments, and Germans, too, fear for their children's future.
The old political establishments are increasingly polarised over the austerity measures and forced bailouts, and are confronted by internet-based civil-society movements that are driven by the hatred of bureaucrats and politicians. They may one day even overturn Europe's familiar democratic political order.
A spectre is haunting Europe, the spectre of fear about the future.
… Were Germany to reintroduce the D-mark, it would regain a much-needed measure of economic sovereignty, and ailing deficit countries would be released from some intolerable pressures … Returning to before the Maastricht Treaty is the only hope for a prosperous, harmonious and peacefully integrated European community. It is not a panacea. But it will enable the various national communities to regain control over their economic fates, and all Europeans could learn from each other how to cultivate their institutions and tackle the challenges of their future in the global economy.
We've quoted the article at length because it is a good summary of the euro-turmoil that the EU is experiencing. From our perspective, this is yet another failing globalist meme … that 2,000-year-old-nations could simply be agglomerated in a few decades via some regulatory declarations.
We've pointed out for a decade now on and off in various forums that the more coercive the Eurocrats became, the more significant the pushback would be. From our point of view, the tribes of Europe were basically bribed to go along with the euro program, but the euros that were scattered about so liberally are long gone.
All that is left are ashes now … and austerity. The French, the Germans, the Spanish and the Greeks are reverting to their tribal roots just as we predicted. These are insular and often violent cultures when provoked and, boy, they are being provoked these days.
We don't see how the euro survives in its current form. The more Brussels insists, the more miserable the situation gets and the more resistance is generated. And the resistance is becoming formalized now, via political parties in both Germany and Britain – and sooner or later France, as well.
All this is being driven in part by what we call the Internet Reformation. This is an important but unheralded factor in what is going on. The top globalists that had their way in the 20th century are simply incapable of effectively promoting their dominant social themes in the 21st.
In fact, as we have observed, authoritarianism, violence and even war has been substituted for the quiet coercion of memes and their development and implementation.
The EU proceeded without a hitch in the 20th century but in this Internet Era the entire promotion has virtually come apart, jeopardizing other unions yet to come and even the idea of a seamless internationalism which seems to be the goal of so many leaders around the world.
In this article, we can see once again that a euro proponent has concluded that the current format is unsustainable. This is a good thing for the peoples of Europe, as if enough economists and politicians turn their backs on this failed experiment it will eventually be reduced or even eliminated.
But people should keep their eye on the larger evolution of euro-skepticism, which we would argue is going to travel far beyond the EU itself and will not stop in the West – and indeed, throughout the world – until the very foundations of what passes for Western "civilization" has come under attack and been thoroughly rationalized.
We're aware that an alternative methodology to achieve globalist goals is war and increasing chaos but in the Internet era, this sort of deliberately violent policy is a serious risk. One runs the risk that people will react to the manipulation not with fear and resignation but with a kind of social fury that risks upsetting the underpinnings of whatever is left of civil society.
This is important to understand from the perspective of both citizenry and investing. The Internet is a process not an episode.