Nov 12, 2011 5:48 AM GMT
My bf believes that if the EU crumbles, so too will peace... I'm a bit more optimistic...but this is definitely an unforced error on the part of the Europeans in an attempt to sustain bloated social networks.
Euro Zone: It's been clear for some time that the European Union is in deep trouble. But now even its own leaders admit something shocking: The EU, and its currency the euro, may soon be a thing of the past.
The EU has had a troubled existence since the euro was first rolled out on Jan. 1, 1999. Sure, the EU has advantages — a single currency, one giant market, freedom of movement for a well-educated workforce, all benefits. Still, it's impossible to have an economic union based on rules no one follows. And that's exactly what's happened in the EU.
Under the 1993 Maastricht Treaty, no EU country was allowed to run a budget deficit of more than 3% of GDP or issue public debt in excess of 60% of GDP. This was to be the bedrock of the EU's financial stability.
In recent years, Greece, Ireland and Portugal have all run deficits over 10% of GDP. Worse, the debts of Greece, Italy, Ireland, Portugal and Spain average 112% of GDP. In short, the countries on the EU's periphery have used membership as a way to redistribute wealth from Europe's rich north to its poorer south.
For a while it worked. But now the debts are enormous, and the amounts needed to bail out the peripherals from their profligacy are so large that citizens in countries such as Germany are saying "no more." By some estimates, as much as $4 trillion will be needed — a number that would bankrupt the EU.
Sure, the poor EU countries deserve blame for running their economies into the ground. But the real problem is the EU itself.
Bureaucratic, overly regulated, undemocratic, inefficient and innovation-stifling, the EU and its single currency face a "moment of truth," British Prime Minister David Cameron accurately observed last week.
Alarmed at the speed of the EU's financial deterioration and by the prospect that Greece and other spendthrift nations could bankrupt the EU, French President Nicolas Sarkozy wants to forge a "breakaway" group of nations within the EU — an EU Mini-Me on steroids.
The basic idea is to take the high-debt loser nations — Greece, Italy, Spain, Portugal and others — and put them into a separate, Euro-ghetto confederation.
Meanwhile, France, Germany and a core of hardy, relatively responsible, mostly northern European nations will have their own EU rules, parliament and capital — a "union within a union," as Britain's Telegraph put it.
Well, good luck. It won't solve the underlying problems that have doomed the EU from the start. To wit: The EU has too many languages, too many cultures and too many economic preferences to make unity work. And it's all based on a model of cradle-to-grave welfare state spending that is now bankrupting its members.
The pressure to dismantle the EU will only grow. For a long time, the EU and its currency let Europeans believe the fiction that they were still a large, dynamic, growing economic bloc, not the stagnant, aging, welfare state they've become.
They now know their only hope is to dismantle infantilizing EU bureaucracy and return responsibility for finance and economics to national governments. The only question is, will they have the courage to do it?