Old Hatreds Flare Up…

It looks like I’m not the only political commentator to evoke the spirits of the past on Europe’s current breakdown (or breakdowns).

From the Daily Mail:

Greeks angry at the fate of the euro are comparing the German government with the Nazis who occupied the country in the Second World War.

Newspaper cartoons have presented modern-day German officials dressed in Nazi uniform, and a street poster depicts Chancellor Angela Merkel dressed as an officer in Hitler’s regime accompanied with the words: ‘Public nuisance.’

She wears a swastika armband bearing the EU stars logo on the outside.

Attack: A street poster in Greece has depicted Angela Merkel in a Nazi uniform with a swastika surrounded by the EU stars. The accompanying words describe her as a 'public nuisance'
The backlash has been provoked by Germany’s role in driving through painful measures to stop Greece’s debt crisis from spiralling out of control.

From a Greek perspective, it seems shatteringly obvious. For them, the Euro has become a battering ram for a kind of fiscal austerity that is set to benefit Germans (price stability) and penalise Greeks (austerity).

As advantageous as the Euro once seemed, it is becoming ever clearer that the union is suffering from deep political fracture. It is a union built without a common language (other than perhaps the belief in bureaucracy — and an unwillingness to give bankers haircuts), without a political head (or even a coherent political structure) without a common culture of work, and without an integrated economy.

That’s why decisive action is proving impossible, in spite of all the rhetoric.

Worse (because it shows contagion at work), it looks like Portugal is about to sink into the mud.

From Ambrose Evans-Pritchard at the Telegraph:

Cashflow problems (making it much, much harder to pay down debt) — that’s what you get when spend-as-much-as-we-want-and-then-print-money mediterranean nations entrust their nation’s monetary to stern-looking austerity-minded German central bankers.

Most startlingly, it looks like Paul Krugman finally got something right:

European leaders reach an agreement; markets are enthusiastic. Then reality sets in. The agreement is at best inadequate, and possibly makes no sense at allSpreads stay high, and maybe even start widening again.

Another day in the life.

Of course, his solution — much, much deeper integration, with a good dose of money printing — is politically impossible, so whether or not it would work (clue: it won’t) is irrelevant.

Meanwhile Americans smoke their hopium (“GDP is up! Stocks are up! The recovery is here!“) hoping that the whirling Euro conflagration will just go away.

It won’t just go away. The global financial systems is an interconnected house of cards — a full Euro breakdown will bring down American banks with European exposure, like Morgan StanleyHank Paulson was telling the truth — either the thing is bailed out (again and again and again) or it will collapse under its own weight.

Creditors — starting with China (who are acquiring gold and Western industrials at a rapid rate) — will be hoping that the system can hold on for a few more years while they try to cash out with their pound of flesh.

Debt-ridden Americans and European would be forgiven for accelerating its collapse…

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4 thoughts on “Old Hatreds Flare Up…

  1. some commentators say euro breakdown could lead to war. while this is connot be ruled out, those same commentators are unable to see that continuing current politics could lead to war even more.

    there were already “leaked” CIA reports that severe austerity could trigger military coup in Greece. that report might have been rigged or not. but let’s look at Greece geopolitical situation. it is in an uneasy relation ship with Turkey (about Cyprus and some islands). Turkey was recently very close to a military coup; it is a big country made up of several cultures and has difficulties in maintaining integrity. Turkey, with it’s rising prosperity and influence, is also a threat to Iran and Syria. possible tensions and problems could come from Iran/Syria to Turkey to Greece to UE. it could be another huge wave of immigrants, an ethnic conflict, “terrorists” etc…

  2. Basic Tribal economics really. If you don’t “Hunt and Gather” you don’t eat. Perhaps if you are lucky you can trick a young man into going out hunting, in return for “Loving” at the end of the day and you don’t have to work. Or you can do what they do today and promise a vote for pensions in return.

    Either way someone has to make an effort. But if you can make an effort and the natural environment does not provide (The first business cycle) you are in big trouble.

    Luckily the chief took a portion of your kill and traded it for gold from a neighbouring tribe. When times were tough he paid gold to other tribes for food to keep his power.

    Then the Chief got lazy and paid other members to do his work for him. The first Public service. But with less hunters how do they get the food to pay for the gold? Go mining for gold.

    And the “system” was born

  3. Pingback: Old Hatreds Flare Up… » Greece on WEB

  4. Pingback: The Biggest Bubble in History « azizonomics

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