Sunday, January 25, 2015


"There is a crisis of confidence at the very heart of Europe, spanning politics, banking and public finances, and with underlying competitiveness issues reflected in weak growth and deflationary pressures.... How did we get here? With the global financial crisis we initially saw deep recession driven arguably by global factors, accompanied by the collapse of Icelandic, British, Irish, Spanish, Portuguese, Greek, even German, Austrian, Latvian and then Cypriot, Slovenian and eventually Bulgarian banks. All this caused follow-through to public finances, and the sovereign debt crisis and European periphery crisis. Recovery has been weak, reflective of weak banks, weak demand for credit because of weak growth prospects, high unemployment, and limited scope for counter-cyclical fiscal policies due to concerns over debt sustainability. Two-tier, or two-speed, Europe sustained an overly appreciated euro for too long. The ECB may also have been way behind the curve for too long, but perhaps due to a fundamental and fatal flaw in the single currency concept: a single interest rate simply did not suit all, and a strong euro further weighed on pan-European recovery. Pulled down by weak economic performance, financial sector stress, and waves of fiscal austerity, European politics has been subject to centrifugal north-south (periphery-core) forces and a crisis of legitimacy for the European Union and its institutions, which are seen as undemocratic (few people vote in EP elections), unrepresentative (EC commissioners are nominated by countries, often not on the basis of any particular meritocratic job selection process but by political favour), big-brotherish, distant and totally out of touch – and, as with Draghi, quick to spend other peoples’ money. This disenfranchisement of ordinary Europeans with the political process in the EU and in EU member states, combined with the weak economic backdrop, is fuelling the rise of the far right and far left, and of unwelcome social forces fanned by many of the same political movements, such as a vent against immigration (which was a cornerstone of post-WWII recovery and growth) and against one central tenet of the EU itself, the free movement of labour and capital. Adding to the mix is the fact that Europe has perhaps the weakest group of political leaders for generations, the only exception lying in the experience and political weight of Angela Merkel in Germany – now perhaps the one great hope for the continent.... We can argue all we like about whether Europe went too far in terms of deepening and enlargement. Perhaps the move to a single currency was a naïve and ultimately dangerous political project. But the reality now is that, more than ever, Europe needs to unite and pull together or the abyss looms".
Timothy Ash, "Guest post: Europe – what a state we are in". The Financial Times. 23 January 2015, in
"The test of the American Republic came when the idea that all men are created equal and endowed by their creator with certain inalienable rights was juxtaposed with the brutishness of slavery. Prior to the revolution, these United States were divided into sovereignties so profound that many states saw themselves as individual nations not bound by the promises of the Declaration of Independence. They believed themselves free to withdraw from the federation if displeased by others' moral interpretations of the Declaration. What ensued was the Civil War, which was fought, as Abraham Lincoln put it, to test whether a nation so constituted could long endure. That is precisely the question of the European Union. Can an entity, founded on nations of wildly different customs, expectations and economies long endure and share a common fate? In the dry technicalities of quantitative easing, Europe has defined its limits of brotherhood. One of those limits is prosperity. Each nation determines how it will plot its own course, its money distributed by the European Central Bank, but under the rules of the individual states and without any nation being compelled to share the fate of another. The euro is a common currency that has no one's picture on the front because the histories of eurozone countries are so divided that there are no common heroes. The United States knows that Washington, Lincoln, Hamilton, Jackson, Grant and Franklin are our common heritage. There is no such commonality in Europe, and, therefore, no transcendence of the customs of nations.... If Europe can parse the common search for prosperity in this way and calmly consider the secession of one of the brotherhood, Greece, over malfeasance far from terrible on the order of human things, then what is to keep any of the Europe's institutions intact? If you can secede or be expelled from the eurozone, and if you might choose to close your border to Slovaks seeking jobs in Denmark, then perhaps you can choose to close your borders to German products. And if that is possible, then what is the fate of Germany, which relies on its ability to sell its goods anywhere in Europe? After all, it is not only the poor and weak in Europe whose fates are at risk. In the end, Europe becomes not so much a moral project as it does a convenience, a treaty, which is something a country can leave at will if it is in its interest to do so. When the South seceded from the United States, Northern men were prepared to die to preserve the Union. Is there anyone who would give his life to preserve the European Union, block secession and demand a permanent, shared fate?"
George Friedman, "The European Union, Nationalism and the Crisis of Europe". Stratfor: Global Intelligence. 20 January 2015, in
The distinction between the economic and political spheres has collapsed in Europe's current series of crises. Inevitably, as in the Great Depression of 1929-1933 / 1939, the 'economic' inevitably becomes 'political'. The best example of this is to-day's Greek parliamentary elections, which seemingly will result in the victory (in the sense of winning the most votes and seats in parliament) of the gauchiste, Syriza, headed by a one-time member of the Greek Communist party's youth wing 1. Whether or not, Syriza forms the next Greek Government and what precisely that government will do once in office: end the austerity programme, exit the Eurozone, exit the European Union, et cetera, the mere fact that such an extremist political party will have come in first in parliamentary elections will: a) have a profound effect on the rest of both the Eurozone and the European Union; b) highlights how the current economic crisis, whose prolongation is au fond a result of the Germany's adherence (and therefor the rest of the Eurozone as well) to the economics of Bruningism 2. So unless Syriza were to completely change front and accept the current austerity programme, look to see further political (and therefore economic) instability in both the Eurozone and the European Union as a whole. In retrospect the underlying fabric of both the Eurozone and the European Union appears to be too weak to withstand the current socio-economic winds which it is enduring. Perhaps fundamentally the real problem of the European Union is that it is not a machtstaat, but merely a wirtschaftsstaat: meaning an economic not a political union. Unfortunately, the last time that a viable European machtsaat could have been constructed was back in the Great War by Imperial Germany. Its failure to do so lives with us still. As Kurt Riezler, diplomatic aide to German Imperial Chancellor Bethmann-Hollweg, noted on the 4th of September 1914:
"People do not have a single idea which correspondences to the greatness of the age. But it would be the ruin of Europe if on this occasion it should not find a possible form of permanence and community".3
1. See: Kerin Hope, "Syriza lead widens as Greeks count polls". The Financial Times. 26 January 2015, in
2. Stefan Wagstyl and Chris Bryant, "German public resists debt cut for Greece". The Financial Times. 23 January in By 'Bruningism', I am of course referring to the Weimar Republic Reich Chancellor whose (in retrospect) mindless policy of unlimited austerity help make the rise of Hitler politically possible.
3.For the Riezler quote, see: Fritz Stern. The Failure of Illiberalism: essays in the political culture of modern Germany. (1972), p. 100. On the origins of the concept of European integration during the Great War, see: David Stevenson, "The First World War and European Integration". The International History Review. (December 2012), pp. 841-863.


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