THE RISK OF POLITICAL UNREST INCREASES IN EUROPE
European leaders are quickly falling behind the curve as European citizens increasingly recognize that austerity is not solving their problems. The single currency system remains deeply flawed and all attempts to stabilize it thus far have been nothing more than swift kicks of the can. I’ve maintained that that can kicking can only last as long as the citizens of these nations remain ignorant of their reality – that they are suffering at the hands of austerity in order to ensure that bankers do not suffer.
In a worrisome turn of events over the weekend the Washington Post is reporting a return of the mass protests in Europe:
“ATHENS, Greece — About 30,000 people protested in Athens’ central Syntagma square on Sunday evening against the government’s tough economic austerity policies.
The demonstration, larger than many others that have taken place during Greece’s economic crisis, appeared to be the first that resulted from spontaneous calls over social media sites such as Facebook. Many others have been organized by unions or political factions.”
The biggest risk in Europe is not that Greece or any other nation will default. It is that the citizens will wake up to flaws of the single currency system and demand a complete reversal of the current course. That could result in defection from the Euro and a complete unraveling of the periphery nations. European leaders must stop focusing on ways to restructure debt and kick the can. Make no mistake – restructuring Greek debt, though necessary, will not fix the Greek economy and it will not stop the austerity that is causing this unrest. More importantly, none of the solutions that have been conceived thus far come close to fixing the inherent flaws in this single currency system.
Interestingly, there is a great lesson from the credit crisis that all leaders should heed. In America, we have a structural problem. We are a nation that has become dominated by financial interests and the result is a deeply indebted private sector that now relies on the aid of its government or its local banker to achieve growth. The American financial crisis was the markets way of telling the country to fix this structural flaw in the system. When we bailed out our banks we were openly saying that the markets were wrong. The response to the crisis has not been one of admittal. Instead, it has been one of denial.
We made a distastrous tactical error when we decided to choose the interests of the bankers over the people. Europe does not have to take that same route. We have not admitted that the system is flawed and in dire need of restructuring. And the result is that the world’s largest economy has an economic “recovery” with a laughable 9% unemployment rate and an economic strategy that is based on the same gimmicks that helped cause the crisis. Europe needs to recognize what the markets are telling these leaders that there is a structural flaw at work here. And it needs to be fixed. They cannot circumvent it with bank bailouts and can kicking strategies as the American policymakers attempted to achieve. If they do, these problems will merely present themselves at some later course in the same disastrous form.
They must find ways to make this single currency system sustainable for the long-run. And that might even involve (gasp!) haircuts for banks. Ultimately, there is only one true way to make this currency system viable and that involves the creation of a central treasury and greater political unity. We’re reaching a point where Europeans need to decide that they are either in this together or not. And the citizens are growing increasingly impatient watching their leaders try to patch together a system that clearly has inherent flaws as is currently constructed.
Cullen Roche
Mr. Roche is the Founder of Orcam Financial Group, LLC. Orcam is a financial services firm offering research, private advisory, institutional consulting and educational services.
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57 Comments
No thanks – a central treasury means a new Imperium in Europe – we have enough centralised decadence in Europe , anything further would merely lead to a new Caligula / Nero.
The monetory priesthood knew exactly what they were doing when they created the Euro – a crisis was inevitable.
They will use this great opportunity to further their twisted ends.
The new financial papacy is rotten to the core – its time for a new reformation and possibly another 200 year religious war to rout these bastards out.
And no more overly complex financial engineering such as MMT either – they are all a product of a global post war oil glut and are merely vehicles of capital destruction that prevent depletion being registered on their books.
Its time to simplify finance to real bills so that all can understand a new financial bible and not reley on holy men to interpret the word for us as they see it through the medium of financial latin.
dito dork:
i wrote similar:
Cullen wrote:
“Ultimately, there is only one true way to make this currency system viable and that involves the creation of a central treasury and greater political unity. ”
This centralization will lead into a complete fashistic leadership of corporations over whole Europe,like you have it already overthere in the US and will be the final death of democracy here in Europe aswell.
we already struggle with this symptom, like i.e. gentech (Monsanzo and Bayer) targets directly EU parliament, therefore tries to undergo national law to force its establishment in Europe against peoples vote/ will. We not only get expropriated by the money system, no the final step when nothing else can generate more debts/ money, is the Expropriation of life (based on pure pseudo science).
If you vote for a centralization of Europe similar to the US, you might be pretty blind that it is destroying diversification, not that centrlization is bad, but under the current compounding moneysystem its bad. I mean you should at least admit that our current moneysystem destroys diversification in the long run, USA is a great example for this.
Thus a deeper centralization of Europe under current money system is absolutely counterproductive, it promots fashistic economic operations.
Cullen,
Dont you see these simple mechanics of compound interest? Again, whats your take on Gesell if ever studied?
Cullen wrote:
“Ultimately, there is only one true way to make this currency system viable and that involves the creation of a central treasury and greater political unity. ”
I think you missed the “to make THIS currency system”. Cullen and any MMT’er just wants to point out that if you want a single currency zone you also need a central treasury and fiscal authority to make is sustainable in the long run. I think most MMT’ers are calling for default and exit of the Euro.