Policy, Politics & Culture
Last Friday I wrote that I was going to let the dust settle before giving my views on the results of the EU summit. Too much was happening too quickly to make sense of it all and I wanted to let the news simmer a while before taking a view.
And there was something else at work. Read the English language commentary about the European Union going back to 1955 and both the European Monetary Union and the launch of the euro, and that commentary was generally too skeptical. The Anglo-Saxon world kept saying the plane would never fly even as the awkward, bulky thing somehow launched itself into the air.
It’s a kind of mirror image of the mistakes Europeans often make about the US. Prophesying the disintegration and decline of the United States has been one of Europe’s favorite parlor games since the days of the Continental Congress — but here we still are.
Whenever possible, I try to do more than express my cultural conditioning and ideological predispositions in expository form when called on for an opinion; it isn’t always easy, but the struggle is worthwhile. Last Friday, my bred in the bone Anglo-Saxon skepticism about those dodgy Europeans was ready to call the agreement DOA, but over the years I’ve learned to the importance of holding that skepticism in check until I’ve thought things over. I’m not a running a hedge fund; I don’t need to be the first guy in town to pull the trigger on an idea.
So I’ve reflected over the weekend, tried to think through what the Europeans are up to, watched the markets take their first and second thoughts, and here is the view: Europe once again has a fudge and not a fix. The agreements at the summit are “agreements to agree”, not actual steps. Germany and France are no closer to resolving their basic differences over the nature of the European monetary regime; the game of financial brinkmanship will go on. The world still does not know when or under what circumstances the ECB will assume unlimited responsibility for European debt, whether the EFSF will become an effective player in financial markets, or indeed whether France will keep its AAA rating.
In some ways the situation is messier than it was before the summit. There is now a question over whether the new agreements and institutions being cobbled together will be able to use EU offices and laws as a basis of operation or whether the British veto will force the creation of a wide range of new organizations with new mandates and powers. If so, how will these work, how will their decisions be enforced, and how long will it take for them to be agreed and set up?
Above all, the question that has haunted the euro from the day it was born is still unanswered: can a one-size-fits-all currency solution actually work in a continent so culturally diverse?
It would be rash to say that the Europeans won’t someday get the euro right; there is a lot of political will behind this project, and rich, determined countries have a lot of things they can do. But as of now, they are no closer to solving their problems than they were a week ago, and the pressures they face are, if anything, mounting.
For now, watch the ECB, rather than the chancelleries of Europe. That is where the action will be.
can a one-size-fits-all currency solution actually work in a continent so culturally diverse?
The problem is not cultural diversity. We have that in the US. The problem is having capital mobile when labor is not. This is the internal contradiction which causes the problem for the Euro.
And with so many mortgages underwater and standards for new mortgages so tight, we now have less mobile labor. Until we let housing prices go to fair market value and find a way to let those underwater escape, we will face problems.
No offense inteneded here, Mr. Mead, but it is hard to believe that it took you a weekend to conclude that “Europe once again has a fudge and not a fix.”
Good grief, man; that was a given.
Pity Europe won’t let Natural Selection work its wonders. Arguably the only way out of this. But that has to do with decisions, consequences, ramifications and the strong and adaptable succeeding and the rest failing.
By choosing anything other than Natural Selection, Europe only guarantees more of the behavior that caused this mess, and less of the behavior that A) didn’t cause it and, B) is required to save from expiration those whose choices were sub-optimal.
It’s like had the Anglosphere chosen natural selection in 1914, one can argue the following changes to the 20th Century: Strong Germany at Russia’s west – no USSR, a less-abrupt end to the Ottoman Empire (with inarguably different results for today’s muslims), no WW2 ETO, No Red China, No Cuba, Angola, Neecaurawgwa, no Korean War, no Vietnam War (French or American experiences), and, had Germany in 1914 taken France, no hiding place for Khomenei and no current Iran or search for an Iranian nuke…
Rather than loaning money to countries (forein aid, IMF or otherwise, America would just say – look, here’s our Constitution; follow it and you, too, might berich one day.
But nope. We have to contiunue to meddle.
Just let Darwin work it out, OK? If a country can’t compete because its government and/or citizens don’t want to (expressed in not adopting governing documents that create freedom and individual rights and free markets), then they need to go belly-up and new governments take their places. And if nations can’t or won’t defend themselves… too bad. If they won’t, why should America’s sons and daughters?
Lack of Darwin gave the world the bloodiest century in history. Let’s try Darwin this time, OK?
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