Tuesday, June 26, 2018

How long before Europe falls apart?

"A beleaguered Europe is facing an hour of trial," wrote VA Nageswaran. "Europe's commitment to internationalism, to an extent, was genuine and that was partly because of its own history of conflict and conquest. Spurred by a guilty conscience, it had sought to erase its past by being accommodative. However, it may have overdone it and many European nations have turned appeasers too." Migration from Africa is causing tempers to fray with Italy and France exchanging insults. Memories of hyperinflation in Germany, which gave rise to the Third Reich, has made it intolerant of any fiscal imprudence. "Not every country in the world can run trade, current account and fiscal surpluses. That is economically impossible. Germany managed to bend Greece to accept such impossible conditions but it probably sowed the seeds for Italians to elect a government that is leery of the Euro project." "In terms of economic strength the eurozone looks brittle." "Globalization, in reality, was transfer of wealth from the workers of advanced nations to capital owners in advanced nations intermediated by the workers of developing countries." The new leaders of Europe are much younger than their predecessors, wrote T Raphael. "The voter sentiment that's lifting the new generation of European politicians to the top is often agnostic of ideological divisions and focused on expectations of change, experiments, different ways of government. It may be interpreted as rejection of wisdom, professionalism and expertise, but it can also be seen as a protest against business as usual, which in many European countries means cronyism and indifference to voters' core interests." Angela Merkel's intransigence and refusal to accept the need for change has led to these problems for Europe, wrote Prof Y Varoufakis. Italians do not want to leave the euro but it might happen anyway, wrote Prof N Roubini and B Rosa. Having a common currency means loss of monetary sovereignty and, "The loss of monetary sovereignty means there are effectively two chains of political command in Italy. One extends from the German government, through the European commission and the ECB, down to the Italian presidency, treasury, and central bank. The other chain of command starts with the Italian prime minister and extends through the government ministries that are responsible for domestic affairs." Not a very stable situation. Eurozone countries like Ireland are actively helping US tech companies to avoid paying taxes in Europe. What will World War III look like? Thankfully we don't know. 

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