The EU’s inability to deliver repeated promises of prosperity continue to ring hollow. After five bitter years of recession, now the bloc can barely register anemic growth.
After so long in the economic doldrums, the fabric of the Mediterranean is being torn apart. Following massive bailouts to Greece and Spain, Cyprus’ savers were pillaged. France and Italy dangle by a thread over the economic abyss. Eurozone unemployment is 12.1 percent, with current predictions merely shaving that to 12 percent by year’s end. (The UK and US are already approaching 7 percent, and falling).
Europe is busily contributing another nightmare chapter to economic history. The Europhile single currency mania promised a prosperous destiny. Brussels’ hype has instead delivered a festering economic disaster. Mediterranean citizens are frustrated at economic bulimia: crazed austerity following spendthrift government. Even Germans are unimpressed that they have suffered library closures and other Teutonic civic dysfunction in order for Berlin to help bail out their southern neighbors.
IMF Chief Christine Lagarde is seen on TV as Eva Borja Jimenez waits for the judicial commission to carry out her eviction in Madrid (Reuters / Susana Vera)IMF Chief Christine Lagarde is seen on TV as Eva Borja Jimenez waits for the judicial commission to carry out her eviction in Madrid (Reuters / Susana Vera)
The core corporatist socialism of the EU apparatus is entirely to blame. Ordinary citizens are apparently an afterthought to the league of unelected Brussels Politburo functionaries. The EU promotes dialogue between ‘stakeholders’ at corporate level. Thus policy develops from the top down, akin to a centralized Soviet, to serve the government-corporate nexus and not citizens. Budgets are finessed from workers’ pockets and the totalitarian leviathan operates in the best interests of ‘big’ (government, politics, corporations, NGOs et al).
This hierarchy leaves the EU horribly exposed, while a slew of emerging markets have kept growing. China and India both grew more than 25 percent over the past four years alone. Eurostat reckons the eurozone might grow 1.2 percent this year – Asian convergence is becoming reality as Europe declines.
An old world protectionist reaction currently bubbling on the political fringes won’t help either. Trade restrictions will only place Europe on a direct route to being an Argentine-style basket case. The information economy is de facto globalized: as neatly exemplified by the lively comment threads passing through servers on multiple continents at the foot of every RT Op-Edge!
Europe needs a new system for growth. Top-down centralization is impoverishing the people. Eurozone members have been held hostage, destroying the devaluation safety valve. Meanwhile, national interests led by France and Germany have protected their banks from debt restructuring, damning the likes of Ireland to bailouts.
AFP Photo / Marius BeckerAFP Photo / Marius Becker
Bloated, slow-moving, democratically unaccountable, centralized governments are utterly inept at dealing with crisis, let alone stepping aside to allow the invisible hand to work its proven economic magic. Thus the Soviet system broke down and so too the EU is doomed without reform. Even insiders are clearly losing faith. Economy Commissioner Olli Rehn recently made a remarkable statement: “The worst of the crisis may now be behind us…” This breathtakingly lukewarm declaration that the worst “may” be over for the battered eurozone suggests even the EU ‘elite’ have an uncertain outlook concerning their vanity project.
Banking remains a massive impediment to eurozone recovery. In January, lending once again declined to households and businesses. This is highly worrying as it clearly shows businesses are not being funded to expand. Even leaving aside the uselessness of the misguided bailout program, the truth is banks aren’t lending to business. That is stifling recovery.
If Europe is to recover its lost economic prestige, it must acknowledge the failure of corporate socialism and move forward. Growth and innovation must be encouraged from the bottom up. That probably means dismantling the EU back to a simple free trade zone, empowering individual creative enterprise while spiking the menace of the far left/right extremists with their vile racist protectionist pandering.
Given how rapidly the EU demands others enact ‘democracy’ and ‘European standards’ of human rights, it is an act of breathtaking hubris to see how poorly Brussels is treating its own citizens in this ongoing economic disaster. Europe’s tragic lost decade remains on track to deliver its citizenry penury over prosperity.
(Patrick L Young is expert in global financial markets working in multiple disciplines, ranging from trading independently to running exchanges.)
The statements, views and opinions expressed in this column are solely those of the author and do not necessarily represent those of LP.