Where I walk where I see
The haunting flares where my friends bleed
I see the face of the enemy
Of a man or boy who is just like me
Less than one year ago, I tried to tell to all my readers that people, who were warning of the end of the Euro-zone, were just fearmongerers who underestimated the flexibility of the European Union and the Euro-zone in finding a viable solution for the sovereign debt crisis.
I was wrong; at least so it seems: less than one frustrating year later, the Euro-zone is still like the proverbial bunch of frogs in a wheelbarrow, all jumping in their own direction. The bad news is that the European economies aren’t performing any better, but are deteriorating instead.
Greece is hanging on to the Euro-zone by the skin of its teeth and is in fact written off by the rest of the Euro-zone: ready for their own old currency and for a newfound status as European Third World-country. The situation in the other PIIGS countries and France is hardly any better. Especially the situation in ‘economic problem child’ Spain is going from terrible to disastrous, with interest rates that were rising past the 7% threshold today.
The funny thing is that this situation isn’t caused by an enormous state debt. The Spanish state debt was only 68.5% of GDP at the end of 2011 and will reach about 78.9% at the end of 2012: high, but not alarming.
What is alarming, however, is:
- the unemployment rate of Spain (24.3% in April, with 51.5% youth unemployment);
- the stable, but comatose situation in the Spanish economy;
- the political division between the central government, the regional governments and special interest groups (f.i. the labor unions), making an all-in approach to fight the economic hardship virtually impossible;
- the financial situation of the local banks, the so-called ‘cajas’ that reportedly have been used as piggy-banks for local politicians and special interest groups;
The situation in Italy is almost as precarious as in Spain: while the Italian economy is performing much better than the Spanish (which doesn’t mean ‘good’, however), the net state debt in Italy is, with €1800+ bln or 120% of GDP, a lot higher.
While it would extremely difficult to save Spain from defaulting, it is plainly impossible to save Italy from this fate. There is no way that the ESM (European Stability Mechanism) and the EFSF (European Financial Stability Facility) combined will ever be large enough to take over the whole financial risk of Italy.
Especially, as the traditional economic powerhouses France and The Netherlands are also underperforming heavily today:
- France suffers from its traditionally high unemployment, its rigid, state-driven and lagging economy, with the numerous stateowned commercial companies, and its expensive social security system.
- The Netherlands suffers strongly from its diminishing intra-European exports and from the fact that companies tried to save their excess personnel in 2009 and are now in a situation of (still) substantial overcapacity, forcing them to lay off the people that were saved in 2009 and many more.
At this moment, Germany seems like the ‘savior of last resort’ for the Euro-zone: the only country that is healthy and strong enough to drag along the whole Euro-zone. Chancellor Merkel, who understands this very well, seems to finally have given up her resistance against a more European approach to the economic crisis, even if this means transferring some of her political controls to Brussels: something that she really hates.
In a normal, sensible European Union, this German sacrifice would have been recognized as a signal for the whole European Union to stand together: one for all and all for one.
This didn’t happen:
- PM Mark Rutte in The Netherlands, backed up by
almost the whole 2nd Chamber of Parliament, stated a firm ‘nyet’ against the
Merkel initiative. The country has generally worked on a reputation as the
Euro-zone bully during 2011, but is now in deep economic trouble itself.
- In Greece, the left-wing populist Syriza party,
led by Alexis Tsipiras, still thinks it can enjoy a free lunch from
Europe: saying ‘nyet’ to the troika (IMF,
ECB and the EU) and still being saved by the EU, enabling the country to stay
in the Euro-zone.
- Spain waited with asking for their €100 bln in bail-out
money in order to save its ailing banking industry, until it was too late. Now
the country suffers from the soaring interest rates on its 10y sovereigns.
- France, since François Hollande’s election, is trying
to push a ‘back to the good, socialistic times’ agenda through the Euro-zone, putting
the country on collision course with Germany.
- Ireland had a narrow escape with the people
voting in favor of the Euro-zone and the European rescue plans after all.
- All other Euro-zone countries show different levels of Euro-fatigueness and no country seems ready to run the gauntlet and create a feeling of unity and solidarity.
The Euro-zone seems on its way to be blown to smithereens: not by letting one or two countries out of it, but by experiencing a total implosion under pressure of the financial markets, the ailing European banks and the international rating agencies. Everybody stands at the side and watches the drama unfold.
The most important question is then: Why couldn’t the Euro-zone countries stand together and save the day?
My take is: Everywhere in Europe the people are getting more and more dissatisfied with their government and their financial and social-economic situation, due to unemployment, austerity and general economic hardship. Their anger and misery is initially reflected on their local and national politicians, but the latter transfer their own responsibility successfully to the European Union, by accusing ‘Brussels’ of everything that is wrong in their country.
For instance: the Dutch Party for Freedom, led by Geert Wilders, speaks structurally of the ‘dictations from Brussels’, regarding the 3% maximum budget deficit from the EU Stability and Growth Pact (SGP), but conveniently ‘forgets’ to mention that The Netherlands was one of the main sponsors of this pact and stood firm for it as long as it concerned the inhabitants of the PIIGS countries.
Populist parties profit from the people’s dissatisfaction by promising these voter-groups a walhalla in case they win the elections:
- European integration out of the way;
- Better social security for everybody that needs it;
- Stronger punishment for crime and fraud and for everybody that stands in the people’s way;
- Their country out of the Euro-zone;
- Just like all immigrant workers ‘that take away the jobs that belong to the Dutch / French / Greek / Spanish / Italian/ German workers’.
Extremist leftwing and rightwing parties everywhere are raising the bids in their hatred for Europe and the European Union and the mainstream parties don’t defend Europe, but just follow the populists.
The result of this polarization within Europe is that the European countries are more and more treating their neighbors and partners as their adversaries, instead of their allies.
And Europe? That’s the biggest adversary of all! The lovebaby that nobody wanted! Undemocratic, distant, wasteful, bureaucratic, patronizing and without any understanding whatsoever for Joe the Plummer, Jean Valjean, Jan Modaal, Otto Normalverbraucher or whatever these so-called normal, hardworking citizens are called.
All these parties are willing to sacrifice the still adolescent, but bright social-economic miracle, called Europe, in order to ‘save’ their own miserable country. Not that this will work out right, but stating that you are in favor of Europe is a political death sentence; at least in North-West Europe.
The courage that the political leaders need to plea allegiance to and fight for the European idea, is extremely hard to find nowadays. In order to save their bacon in the next elections, most parties treat Europe as a stepchild. A very grave mistake in my opinion.
Could this be the end of the Euro-zone and the European Union? It might, when positive change stays away and political unity deteriorates further.
This really makes me sad, but not regarding this development would be naive in my opinion.