I would like to introduce myself to you. I am Ernst Labruyère, a Dutch business analyst and testing specialist who is heavily involved in the economy and financial world, a.o. with a long term assignment at a leading bank in the world. "It's the economy, stupid..." is a very truthful saying and it is my opinion that everybody should know (a little bit) about the economy.
In this blog I try to share my view on the economy: a view of which I hope it is out of the box and not the one of the moral majority. On this blog I will share some old articles I wrote to sites like http://www.minyanville.com/ and in the coming weeks new articles will follow. I wish you a pleasant reading.
Especially on American blogs like http://www.minyanville.com/, http://www.globaleconomicanalysis.blogspot.com/ and others there is a strong aversion against the Euro. The Euro - is a common opinion - is and always has been a bad idea that will create havoc among the participants. This vision seems to be confirmed by the current problems in the PIIGS-countries (Portugal, Italy, Ireland, Greece and Spain) and Belgium.
And when you have this anti-Euro view, you can always find a video of an Anglophile politian, yelling at the members of the European Parliament, that the Euro is a failure and that the European Commission is a bunch of idiots that will create havoc and riots in Europe with their mindless plans to bailout all European countries and with their hunger for more Europe and less nation state. Inquiring minds will read this article: Serial-bailouts…
Maybe a majority is forming in some countries that considers it a good idea to leave the Euro. I think it's not:
Over the last 110 years there have been 2 World Wars, numerous regional wars and a cold war fought on our turf. Fascist regimes stayed until 1975 (Franco in
Spain) in Europe and regional conflicts like the Yugoslavian and the Kosovan war are only less than 15 years ago. Don’t forget also the bloody religious conflict and the English occupation in . Northern Ireland
If you live in the
, where borders are often hundreds of miles away, it is easy to forget the European history, but most Europeans don’t. You only have to drive 300 miles to Berlin, Germany to look at the Remembrance Church (Gedächtniskirche) or 200 miles to Verdun, Belgium where uptil today tons of explosives and remainders from the first World War are found, to remember what the European Union is all about. United States
The European Union – started as the European Community for Coal and Steel by a.o.
Italy, France, and The Netherlands – was our way out of the deadly spiral of war upon war that lasted for more than 1900 years. It brought tremendous prosperity to all member countries and – very important – it helps to withstand a little bit the “divide and conquer”-politics of the Belgium in past and present. United States
If you look at the different states of the European Union you will see that they produce goods and products of a quality that is second to none and that is famous in the whole world: Volvo’s, Mercedeses, Rolls Royces, Ferraris to only mention the car brands and topquality household appliances and food produce with an unbeatable variety. Flowers from The Netherlands are exported over the whole planet and your hamburger probably has a European onion on it.
Then the Euro: the scapegoat for everything that is wrong about the European Union and the big game that all bondholders are hunting for nowadays. Why do we have it in the first place?
If you drove with your car from… The
Netherlands to in the year 1990, a robust 1000 mile drive, than you would have to purchase: Dutch Guilders, Belgian Francs, French Francs, Spanish Peseta’s and Portuguese Escudo’s. ATM’s were not widespread in those days and Bankcard transactions with your Dutch Bankcard in every European shop were still a mirage at the horizon. I still have at least 6 european currencies hidden in a box, that I kept from past vacations. Portugal
The whole European union had at least 20 currencies in a geographical area that is a fraction of the
. Was the Euro therefore a good idea?? You bet it was. United States
Of course the coming months will be extremely tough with the bondholding scavengers trying to feed on the misery of Greece, Portugal, Spain, Italy and England (Pound Sterling(!)) with their enormous national debts, compared to their GDP and eventually Germany, France and The Netherlands will go through a very tough time… But is the Euro to blame for that?
Or are it the stupid ideas that:
- houseprices will never fall, so whatever you pay for it is a right price.
- Banks will help the whole economy and community when they prosper.
- The market will never fail, if you just let it run its course.
- The economy will grow forever
- It is good to lure American and Japanese multinational companies with ridiculous tax rates to keep employment going.
To start with the last stupid idea: A tax rate of 12,5% for corporate tax is not a VIABLE tax rate for a country. And as soon as you increase taxes… the American and Japanese companies are gone to another stupid country.
And maybe the Free Market would never fail eventually if we let it go totally: but what country can afford to let the market go all the way, if the rest of the world is forcing it to take measures. Therefore a truly free market is a mirage from Austrian economy books. Professor Mike Shedlock knows this in his heart when he is a honest man, which he truly is.
Will the Euro survive? Your guess is as good as mine?! But should it survive as well as the European Union? You betcha.
Europe goes through a very tough period with Islamophobia, Xenophobia and Europhobia as a natural reaction to the economic misery that is spread among us. But is a return to the pre-1990 situation a good idea? You bet it isn’t. Most Europeans will guarantee you that.