Which European Crisis Solution Do You Prefer?
The European debt crisis drags on. When I read about all the "solutions" being proposed, I find most of the solutions proposed by the politicians or bureaucrats in Europe come and go and the crisis remains. For a few days, maybe a couple of weeks, things seem more cheerful, then another shoe drops and the whole mess goes into critical mode again.
Right now, it seems that everyone is waiting for a ruling by the German court on September 12th, with the result that things are relatively calm. The German court will rule on what the German central bank, the Bundesbank, is allowed to do or not do to deal with the crisis. Without going into the details now, I'm skeptical as to whether the ruling will be the big deal everyone makes it out to be, simply because everyone's making it out to be such a big deal. We'll see.
Meanwhile, some thoughtful people continue to propose solutions. They're a bit more interesting, in that there's usually no agenda attached to them. One writer recently suggested two solutions: Disaster A and Disaster B. Interesting label for a solution, don't you think?
Obviously, he's not all that encouraged by the choices facing the European leaders.
Disaster A will occur if the European nations decide on a closer fiscal union. This means that decisions about how governments tax their citizens and spend that money will be controlled to a great degree by some centralized bureaucracy. That centralized bureaucracy would hold power over the various individual governments of Europe and would decide how they can or can't tax their people and spend the money they take in from taxes.
The way this looks to me is like a kind of cheap imitation of the federal system that the United States came up with after we beat the British and won our freedom from the UK way back in the 18th century. That system has been chewed up and perverted over time, for sure. But it worked OK for a while, and even works in some ways even now. The thing is, we Americans had a lot more in common then - even with our regional differences - than the citizens of the European countries have now.
So I can see why the writer calls fiscal union Disaster A. With all their differences, how in heck will the Southern countries accept the austerities that will be required if the Northern countries wind up forking over more of their taxpayers money to save the EU? It seems a bit of a stretch to me.
Disaster B happens when the EU breaks up. Why disaster? Well, for one thing, apparently a lot of those Germans who don't want to fork over money to save the EU now (and this is before any fiscal union) don't realize that a break up of the EU will probably slam their economy pretty hard. Until now, the price of German goods has been cheap because of the way the European Union prices their currency, the Euro. And if the EU breaks up and the Euro goes down the drain, German goods will cost more, and their exports will take a nosedive, and Germany's economy will not do very well. That's just one example.
I don't know whether Disaster A or Disaster B will occur at all. And indeed, the writer, being a smart guy, does pose a third alternative - that the European leaders will just kick the can down the road. Frankly, it's something I've brought up before a number of times, and as time goes on, my view remains that this is indeed what they'll do.
Why should they make any hard decisions when whichever way they turn disaster lurks? What's in it for them? The politicians who vote for disaster will not be re-elected. Most politicians only care about being re-elected, so you can see why they'll just put off making any kind of decision that could cause them not to be re-elected.
The bureaucrats who take a chance on any real solution might face having their power curtailed, instead of enhanced. Bureaucrats only want to increase the size - and therefore the power - of their bureaucracies. They certainly won't vote to decrease the size of the bureaucracy. As for changing things in any way, they've been able to build a bigger European bureaucracy over time with things as they are, so why not just keep going the same way? Why take a chance on change when you can keep things going - at least until it's time to retire? Then the new younger bureaucrats can deal with the even bigger crisis that will surely result from kicking the can down the road.
So in the end, doesn't it make a lot of sense for these politicians and bureaucrats to do whatever it takes to keep things bumbling along? It would take a leader of great courage and lack of selfishness to push reforms that would really and fundamentally change the current system. Do you see any such individual in that whole Draghi-Merkel-Monti-Hollande-etc. crew over there who strikes you as having the courage and selflessness required? I don't.
Of course, this doesn't mean that kicking the can down the road really works. Maybe some of the politicians and bureaucrats hold on and take all they can before things get crazy. Maybe.
As for the people of these countries, well they don't seem to matter much to the politicians and the bureaucrats when you get right down to it.
Right now, it seems that everyone is waiting for a ruling by the German court on September 12th, with the result that things are relatively calm. The German court will rule on what the German central bank, the Bundesbank, is allowed to do or not do to deal with the crisis. Without going into the details now, I'm skeptical as to whether the ruling will be the big deal everyone makes it out to be, simply because everyone's making it out to be such a big deal. We'll see.
Meanwhile, some thoughtful people continue to propose solutions. They're a bit more interesting, in that there's usually no agenda attached to them. One writer recently suggested two solutions: Disaster A and Disaster B. Interesting label for a solution, don't you think?
Obviously, he's not all that encouraged by the choices facing the European leaders.
Disaster A will occur if the European nations decide on a closer fiscal union. This means that decisions about how governments tax their citizens and spend that money will be controlled to a great degree by some centralized bureaucracy. That centralized bureaucracy would hold power over the various individual governments of Europe and would decide how they can or can't tax their people and spend the money they take in from taxes.
The way this looks to me is like a kind of cheap imitation of the federal system that the United States came up with after we beat the British and won our freedom from the UK way back in the 18th century. That system has been chewed up and perverted over time, for sure. But it worked OK for a while, and even works in some ways even now. The thing is, we Americans had a lot more in common then - even with our regional differences - than the citizens of the European countries have now.
So I can see why the writer calls fiscal union Disaster A. With all their differences, how in heck will the Southern countries accept the austerities that will be required if the Northern countries wind up forking over more of their taxpayers money to save the EU? It seems a bit of a stretch to me.
Disaster B happens when the EU breaks up. Why disaster? Well, for one thing, apparently a lot of those Germans who don't want to fork over money to save the EU now (and this is before any fiscal union) don't realize that a break up of the EU will probably slam their economy pretty hard. Until now, the price of German goods has been cheap because of the way the European Union prices their currency, the Euro. And if the EU breaks up and the Euro goes down the drain, German goods will cost more, and their exports will take a nosedive, and Germany's economy will not do very well. That's just one example.
I don't know whether Disaster A or Disaster B will occur at all. And indeed, the writer, being a smart guy, does pose a third alternative - that the European leaders will just kick the can down the road. Frankly, it's something I've brought up before a number of times, and as time goes on, my view remains that this is indeed what they'll do.
Why should they make any hard decisions when whichever way they turn disaster lurks? What's in it for them? The politicians who vote for disaster will not be re-elected. Most politicians only care about being re-elected, so you can see why they'll just put off making any kind of decision that could cause them not to be re-elected.
The bureaucrats who take a chance on any real solution might face having their power curtailed, instead of enhanced. Bureaucrats only want to increase the size - and therefore the power - of their bureaucracies. They certainly won't vote to decrease the size of the bureaucracy. As for changing things in any way, they've been able to build a bigger European bureaucracy over time with things as they are, so why not just keep going the same way? Why take a chance on change when you can keep things going - at least until it's time to retire? Then the new younger bureaucrats can deal with the even bigger crisis that will surely result from kicking the can down the road.
So in the end, doesn't it make a lot of sense for these politicians and bureaucrats to do whatever it takes to keep things bumbling along? It would take a leader of great courage and lack of selfishness to push reforms that would really and fundamentally change the current system. Do you see any such individual in that whole Draghi-Merkel-Monti-Hollande-etc. crew over there who strikes you as having the courage and selflessness required? I don't.
Of course, this doesn't mean that kicking the can down the road really works. Maybe some of the politicians and bureaucrats hold on and take all they can before things get crazy. Maybe.
As for the people of these countries, well they don't seem to matter much to the politicians and the bureaucrats when you get right down to it.
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