TheBrutalTruth
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March 2, 2009
Growing Economic Crisis Threatens the Idea of One Europe
By STEVEN ERLANGER and STEPHEN CASTLE
PARIS The leaders of the European Union gathered Sunday in Brussels in an emergency summit meeting that seemed to highlight the very worries it was designed to calm: that the world economic crisis has unleashed forces threatening to split Europe into rival camps.
An urgent call from Hungary for a large bailout for newer, Eastern members was bluntly rejected by Europes strongest economy, Germany, and received little support from other countries. Chancellor Angela Merkel of Germany, facing federal elections in September, said countries must be dealt with on a case-by-case basis.
Saying that the situation is the same for all Central and Eastern European states, I dont see that, Mrs. Merkel told reporters. She spoke after Prime Minister Ferenc Gyurcsany of Hungary warned, We should not allow that a new Iron Curtain should be set up and divide Europe.
Does any one else feel like doing a double take after reading that?
With uncertain leadership and few powerful collective institutions, the European Union is struggling with the strains this crisis has inevitably produced among 27 countries with uneven levels of development.
The traditional concept of solidarity is being undermined by protectionist pressures in some member countries and the rigors of maintaining a common currency, the euro, for a region that has diverse economic needs. Particularly acute economic problems in some newer members that once were part of the Soviet bloc have only made matters worse.
Europes difficulties are in sharp contrast to the American response. President Obama has just announced a budget that will send the United States more deeply into debt but that also makes an effort to redistribute income and overhaul health care, improve education and combat environmental problems.
Redistributing Income is a stupid idea, and is not the same as redistributing Wealth. In short, the government is making it harder for people to amass wealth on their own, by taking larger and larger chunks of their income as they get more and more income.
Fortunes such as Bill Gates and Warren Buffetts are safe from these new attempts at redistributing Income, and thus the only people that suffer are those that produce new sources of wealth. Entrepreneurs and business people. I really doubt that Bill Gates and Warren Buffet would have supported these idiotic liberal policies as they were starting their respective businesses.
Attempting to Overhaul Health Care is also a stupid idea that will only succeed in making it more expensive, rarer, and less effective, witness the Education system.
Which is once again up for "Improvement". Attempts to improve it through spending more have failed. The United States spends more on education than any other country in the world, and yet some how the Democrats believe that if we just spend more all the problems will be resolved. Perhaps they should be looking at giving more autonomy to schools and forcefully dissolving the Teachers' Union so that Incompetent or Criminal Teachers can be fired with out going through a billion hoops.
As far as Environmental Problems. One only needs to ask what environmental problems? The answer to that is of course the emission of Carbon Dioxide, which if one looks at weather trends for the last 10 years IS NOT A Problem. Perhaps the Democrats will look at actual problems such as the usage of mercury in the refining of Gold in third world countries, or the scarcity of water in the South West (Water which could easily be transported from the oceans if research was done to find an economical way to desalify sea water.)
Instead the Democrats are focusing on a non-problem that probably benefits the environment by encouraging more plant growth, and thus is sustainable. Then there is the fact that Gore's vaunted "Consensus" of "Scientists" was anything but.
Whether Europe can reach across constituencies to create consensus, however, has been an open, and suddenly pressing, question.
The European Union will now have to prove whether it is just a fair-weather union or has a real joint political destiny, said Stefan Kornelius, the foreign editor of the German newspaper Süddeutsche Zeitung. We always said you cant really have a currency union without a political union, and we dont have one. There is no joint fiscal policy, no joint tax policy, no joint policy on which industries to subsidize or not. And none of the leaders is strong enough to pull the others out of the mud.
Well, this can be interesting. I'm hoping that it will dissolve.
Thomas Klau, Paris director of the European Council on Foreign Relations, an independent research and advocacy group, said, This crisis affects the political union that backs the euro and of course the E.U. as a whole, and solidarity is at the heart of the debate.
The crisis also has implications for Washington, which wants a European Union that can promote common interests in places like Afghanistan and the Middle East with financial and military help.
Which Germany and France have shown they are willing to do as long as the ME countries they are helping are our enemies. One only need to look at the German and French Contracts with Iraq and Iran for proof of that. Instead of hamstringing our own corporations with restrictive trade policies we should be allowing them to engage in sending goods to Iran, and other nations where they are not currently permitted to send goods.
As Benjamin Franklin said, "No country was ever harmed by trade."
It would also be a suitable way to at least have some kind of impact on our trade deficits.
All of that is in doubt if the cornerstone of the E.U. its internal market, economic union and solidarity is in question, said Ronald D. Asmus, a former State Department official who runs the Brussels office of the German Marshall Fund.
Funny thing that, Marshall Fund, you mean we're still giving Europe Billions in Aid?
The problems are basically twofold: within the inner core of nations that use the euro as their common currency, which together have an economy roughly the size of the United States; and within the larger European Union.
And almost 2x the population, a good percentage of which are unemployed. Hardly an example to inspire mimicry.
The 16 nations that use the euro introduced in 1999, and one of the proudest European accomplishments must submit to the monetary leadership of the European Central Bank. That keeps some members hardest hit by the economic downturn, like Ireland, Spain, Italy and Greece, from unilaterally taking radical steps to stimulate their economies.
The bankers control everything... Yeah, just what we should emulate here in the United States.
Germany once vowed never to bail out weaker members in return for giving up its strong national currency, the deutsche mark. But German leaders are now faced with the unpalatable prospect of having to put German money at risk to bail out less responsible partners that do not adhere to European fiscal rules.
Perhaps Germany will choose to go its own way, separating itself from the EU, and ending this idiotic European Experiment. Or perhaps the other members will choose to go their own way and stop allowing Germany and France to dictate to them, an example that the United States should emulate if those nations choose to do so.
Within the larger European Union, fissures are growing between older members and newer ones, especially those that lived under the yoke of Soviet socialism. Some countries of Central Europe, like the Czech Republic and Poland, are doing relatively well. Others, including Hungary, Romania and the Baltic states, are in a state of near-meltdown.
The United States catches a cold and the world gets Pneumonia. So much for them not needing us...
But only two newer members tiny Slovenia and Slovakia are protected by being among the countries that use the euro, and there was little support on Sunday for changing the rules to allow more to join quickly.
Germany is having economic difficulties of its own. Decreasing Exports due to China having the same problem. Yet the NY Slimes is saying that having the Euro as a currency is protecting Slovenia and Slovakia? Perhaps what is really protecting those two tiny nations is not being as interconnected with the rest of the world as other members of the EU.
Many new members have seen their currencies plummet against the euro. That has made their debt repayments to European banks, their primary lenders, a much greater burden even as the global recession has meant a plunge in orders from consumers in the West. Some countries are asking for aid, both from their European partners and from the International Monetary Fund, to prop up their currencies and the banks.
Ah yes, IMF, Financed mostly by the United States, and how we pay tribute to all the nations that agree to help us...
While Western European countries are reluctant, with their own problems both at home and among the countries using the euro, there is a deep interconnectedness in any case.
Der... Why do these people state the obvious?
Much of the debt at risk in Eastern Europe is on the books of euro zone banks especially ones in Austria and Italy. The same is true of problems farther afield, in Ukraine, which is not yet a member.
Having watched the Soviet Union collapse, the countries of Central and Eastern Europe embraced the liberal, capitalist model as the price of integration with Europe. That model is now badly tarnished, and the newer members feel adrift.
Which must be why they are in such a rush to go back to Communism... wait you mean they aren't? OMFG it's a conspiracy to make the liberals look like idiots.
Before the larger European summit meeting on Sunday, the Poles called an unprecedented meeting of nine of the new member nations in the East to discuss common grievances.
Like the fact that they are subject to the whims of France and Germany?
Prime Minister Mirek Topolanek of the Czech Republic, which holds the rotating presidency of the European Union, tried to ease tensions, insisting that no member would be left in the lurch.
Strange, didn't Germany just say it wasn't going to help any other nations? Isn't that leaving them in the "lurch?"
We do not want any dividing lines; we do not want a Europe divided along a north-south or east-west line, pursuing a beggar-thy-neighbor policy, Mr. Topolanek said.
But his Hungarian colleague, Mr. Gyurcsany, called for a special European Union fund of up to $241 billion to protect the weakest members. His government circulated a paper on Sunday suggesting that Central Europes refinancing needs this year could total $380 billion.
Failure to act, the paper said, could cause a second round of systemic meltdowns that would mainly hit the euro zone economies.
Mrs. Merkel opposed an undifferentiated package, although she suggested on Thursday that targeted help might be offered to specific countries, like Ireland.
Governments of the countries of the European Union have already spent a total of $380 billion in bank recapitalizations and put up $3.17 trillion to guarantee banks loans and try to get credit moving again.
On Friday, the European Bank of Reconstruction and Development, the European Investment Bank and the World Bank said they would jointly provide $31.1 billion to support Eastern European nations, but much more will be needed.
Mr. Klau, of the European Council on Foreign Relations, sees a worrying loss of faith in a certain brand of capitalism. Its politically dangerous there since theyve just emerged from an ultraregulated and stifling system, were confronted with shock therapy that created great hardship, and are just beginning to recover and stabilize, he said. Now theyre thrown back into an economic and political cauldron.
The new members are finding that their European partners are putting their own national interests ahead of collective and necessary solidarity, Mr. Klau said.
Charles Grant, director of the Center for European Reform, a research group in London, is more sanguine, however. My expectation is that the euro zone countries, out of pure self-interest, will bail each other out, he said. For Central and Eastern Europe it is too early to say there wont be solidarity. But non-E.U. countries in the east particularly Ukraine seem to be the No. 1 worry.
Steven Erlanger reported from Paris, and Stephen Castle from Brussels.
About the only thing of interest in this article is the fact that the EU may be self-disintegrating due to the policies put forth by France and Germany. For all their talk of how the EU would help all their members they are showing that they were not truly interested in helping other EuroZone nations, but in stealing from them by forcing them to pay into the EU's coffers through international taxation (Carbon Taxes.)
Perhaps the world will be able to let out a collective laugh when the entire "community" starts fighting again, and we will no longer here about how all nations should become more interconnected with their neighbors, having seen direct proof of how idiotic that idea is. I for one would not miss all the crazy talk of NAFTA and a NAU.
