Monday, October 10, 2011

‘Time short’ for eurozone

"Time short" for eurozone according to David Cameron. The European Union was first formed in 1958 by six member countries. What we think of today as the European Union was created by the Maastricht Treaty in 1993. Today the EU consists of 27 countries.

What I've always found fascinating was the very concept of the EU is contrary to the history of Europe. The continent of Europe consists of some 50 countries which is a rather huge number given the land mass of Europe in comparison to Africa or Asia. Why so many countries? In short, because the various kingdoms and duchies did not trust one another. The lack of trust lead to the agreements that triggered the First World War. France and England did not trust Germany (which did not trust the former) which ultimately lead to World War II.

National pride has always been at the heart of Europeans. Don't believe it? Go watch Germans or Spaniards cheer on their favorite football (soccer to us) team. Pittsburgh Steeler fans don't even come close! Why then try to create an institution of transnationalism pretending that everyone likes and trusts one another?

The Greek economy has failed in a spectacular way and the EU is demanding Germany and France bail out the Greeks. Wars have been started over less and I think the Greek bailout (which would also lead to bailouts of Ireland, Spain and Portugal) would start more riots in Europe. Countries such as the United Kingdom and Denmark that did not join the EU are dealing with declining economies as demand for their goods declines due to the drop of EU based economies. Increased shipping costs are also helping to reduce profits for the Europeans.

Americans know we have nothing to be smug about. Our jobs continue to decline despite huge injections of cash by the Obama Administration to create new jobs. The problem in the United States is not a jobs problem but stagnant growth. Companies will add jobs if there is more demand for their goods or services. However, to simply mandate the creation of new jobs is forcing more of employers to shut down or relocate. Fewer jobs means less tax revenue to offset the cost of two wars that have been waging for a decade. Now we see groups like Occupy Wall Street beginning to surface. They don't know what they want but they know what they don't like. Sounds like a recipe for riots to me.

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