It is amazing the amount of talk about the European financial fiasco, and how the European Union is doomed in the future. That it may not look the same in 5-years time, and that it will have to shed many of the most socialist nations with run-away debt and poor fiscal policies. Okay so, let's talk about this and let's ponder some of the potential solutions being floated shall we?
There was an interesting article in the UK Telegraph on November 30, 2011 titled; "Should the FED Save Europe from Disaster? - The dam is breaking in Europe. Interbank lending has seized up. Much of the financial system is paralysed, setting off a credit crunch just as Euroland slides back into slumpm" by Ambrose Evans-Pritchard.
Okay so, is the Eurozone really a slow motion train wreck? Many believe so, as do I, mainly because I do not see how socialist leaning government can get off their addiction or opium of the masses. Once all those entitlements are promised and put into practice, they are almost impossible to get rid of, regardless of the nation, culture, or historical heritage behind the society.
Will all of Europe become a Greek Tragedy? Well, it certainly could and without funding fast or a lender of last resort big enough to bail out the whole kit and caboodle there simply will not be enough confidence to keep bond investors happy, or allow the interbank lending to flow again. The system is broken, with "systemic" problems, its foundation is rotten and breaking away. Some folks had hoped that China would step up to the plate to help bail out the EU, but that isn't likely to happen.
First, China can't, as it doesn't have enough fire power on its own. Second, it won't because it has its own problems at home. Its foundation is built on half-truths, corruption, and hiding of real financial data from the real estate market to the banking sector. So, suffice it to say that's not going to happen - China needs to save itself.
What about Japan? Japan is in no position with its demographic shift and pension obligations, legacy costs, and already high-debt. Should the FED step in and help the problem? Well, the problem is pretty vast and the ECB and EU leaders already told the FED and the US Treasury where to stick it after the 2008 financial crisis, and wouldn't work together, so they did their thing and we did ours.
Our massive stimulus seemed to put off our problems to another day, and the EU's deliberate move at austerity, well, it didn't work - only added to the problems, and now civil unrest and economic stoppage. The amount of money in "trillions of dollars" to bail out the EU simply isn't in the cards for the US, we can't. It might sound nice to say we support the EuroZone but in the end the inevitable is going to come to pass.
Only the EU can bail itself out, and yes, they'll need support from the rest of the global community, but that's not going to happen unless these crazy thoughts of socialism can leave the room - I don't see that happening with an entitlement crowd, whole populations of nations which feel they deserve something.
What about quantitative easing, what about the ECB becoming like the Federal Reserve, or what about breaking up the EuroZone in various zoning levels like a pyramid chart of Maslow's hierarchy of needs? Sure, all that should be on the table, I just wish they'd get their act together and sooner rather than later. Please consider all this.
Lance Winslow has launched a new provocative series of eBooks on Future Concepts. Lance Winslow is a retired Founder of a Nationwide Franchise Chain, and now runs the Online Think Tank; http://www.worldthinktank.net
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