Tuesday, January 29, 2013
Europe's Future in the Hands of Britain and France
Over the past two months, Europe's problems seem to have disappeared from the headlines - probably because of the Christmas-New Year holidays, the second inauguration of President Obama and the French incursion into Mali to drive out the jihadists threatening to overrun the country. But while these events have been occupying the front page, the new French Socialist government is pushing ahead with policies that will result in significantly higher government spending, greater business and commerce regulation and severely higher taxes on those with high incomes. The long-term effects of the Socialist policies are already being felt, with high-income entertainment and business personalities taking their fortunes out of France, as well as jobs being lost because of plant closings, partly because of higher taxes and partly because of slowing French economic activity. One thing is certain. The French Socialist policies will lead to further economic decline, which could be accelerated if France is drawn into a long conflict in West Africa as a result of its intervention in Mali. France's longer term strategic and financial commitment to West Africa will be unavoidable, given the historical importance of the French presence in the region, and this commitment may finally expose the decline and growing fragility of one of Europe's largest economies. France's problems are coming at the same time that British prime minister David Cameron has set Britain on a path to a popular vote referendum on British continued membership in the European Union. France is a partner with Germany in the two-nation Axis that runs the EU politically. But Britain is second only to Germany as a major provider of funding for the EU. If France should require an economic bailout or Britain votes to leave, the EU will probably begin to disintegrate. These issues should be a primary economic and political focus. Instead, international investors and the media are focused on beginning signs of economic recovery in the US - encouraged by the impact of the Federal Reserve's recent decision to continue pumping money into the US econony. This, combined with US government hyperbole and misleading inflation and unemployment statistics, has masqueraded as good news, allaying fears about the runaway US debt and dysfunctional Washington political scene. These concerns appear to outweigh ECB president Mario Draghi's promises to create as much 'fiat' Euro currency as required to support the sovereign debt obligations of all Eurozone member states. As a result, the Euro has staged a fake return-to-normal rally. But, worries about the economic health of France must be keeping German Chancellor Merkel awake at night. Suggesting that France is a potential death threat to the EU, the Economist's cover for the November 17-23, 2012, issue carried the headline, 'The time-bomb at the heart of Europe.' An open-ended commitment to defend France's former West African colonies against islamist incursions from the Sahara could provoke a fiscal crisis. Whereas the economies of most of the EU bailout nations - Ireland, Greece, Portugal and Spain - were small enough to be bailed out, France has the fifth largest economy in the world and would bankrupt even Mr. Draghi if it went under. So, dear readers, even though the EU has been out of the spotlight recently, do not be misled. Europe is hurting and the end is far from clear. Mr. Cameron has proposed the right approach -- renegotiate the social, political and fiscal relationships among EU member states so that each of them has a chance to save itself and thus participate in the salvation of the EU.
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Have we not learned anything form the past ... from history. If we continue to ignore history we will continue to be boys and girls and not men an women. We will never solve our problems we will simply keep reinventing the same basic solution for our problems and continue being astonished by the same unsatisfactory results.
ReplyDelete"The first lesson of economics is scarcity: there is never enough of anything to fully satisfy all those who want it. The first lesson of politics is to disregard the first lesson of economics'.
Thomas Sowell
Wasn't the whole idea of the EU to glue the economic output and political clout of the Progressive, political left leaning individual European nations into one huge conglomerate of nations that had for the most part witnessed their better days as being in the past. Now certainly this was not true of Britain, France, Germany, Spain and possibly Ireland, Portugal, and Greece a few years ago at the outset of the EU.
ReplyDeleteThe rest of the original EU countries and those that were to follow later were pretty much destitute as world participating economic powerhouses and political driving forces internationally.Some may have even looked upon the EU formation as the last hurray for 60% of the EU founding states.
So why should anyone care what happens to the EU now, today?
For what I see as the main reason ... A UNITED EUROPEAN FRONT against the advancement of jihad terrorism from the Middle East and North Africa up into the Mediterranean Sea facing European nations. A united front much like what France is demonstrating in Mali. A giant force that could be construed as a defender of Israel ... if only as a self defense move to protect their own borders.
France and Germany the EU's political strongmen, Britain and Germany the EU money men. These are not the Germany, France, and Britain of your grandfather's days. This is not the world of your grandfather's days. this is not the world of 9/10/2001. This is a world of us against them. And if we don't defeat them (Jihad terrorists) they will defeat us with no mercy at all ... we are their arch enemy -THE INFIDELS.
If the EU collapses what does it do to the world economy?
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