The EU/Euro saga doesn't get any better. After weeks of the Spanish Government basking in denial of any financial problems it was finally admitted that actually there was one,- and a big one.
The quick solution wasn't a bailout.Oh no. It wasn't like Ireland's or Greece's where hair shirts have been prescribed. No, this was entirely different. The banks, not the government needed a bung and all would be well. People would stop demanding exorbitant rates for lending to the country and life could proceed without the onerous demands for good financial behaviour and austerity imposed on the others in return for the cash. That was entirely fair,- as the Irish and Greeks would reasonably understand of course. It wasn't a bailout so strict conditions wouldn't be needed.
Anyone who bought all that would need their head, not to mention their finances -examined. Within a day or two the world had said "So what?" Spain's borrowing rate soared to 6.5% and now to a disastrous 7% today. The 100 billion Euro non-bailout has been rendered ineffectual,-i.e. a waste of otherwise productive money which could have been going into projects and expenditure to get national economies going, take people off handouts and make them good taxpayers once again. Except in Greece of course where it seems that many never got round to paying taxes in the first place.
So why does this circus of throwing good money after bad keep going on?
It's largely down to the noisy and remarkably effective argument that if this one and the next and the next aren't saved from going down the plug or the terrible fate of having to leave the Eurozone, the whole cardhouse will collapse, the Euro will suffer and take with it all EU economies, Eurozone or not. That, they say, will knock on to a financial meltdown for the rest of they world. Hmm. The risk is much greater if money continues to be thrown uselessly on the fire. Remember the lessons of trying to defend national currencies against devaluation. The money markets aren't stupid, can see there will be a point where further support is unaffordable so they bring on the moment and make it inevitable by betting against the soon-to-be loser. (And do very nicely out of it thankyou, but that's real life).
OK,-then what's the real underlying problem? Why does it keep coming back like a snuffed out party candle?
Again simple. Both the EU and, even more, the Euro are artifical structures. These when stretched and stressed beyond their original or sensible design limitation will fail. Stiffen them up by slapping on more steel, concrete or whatever and they will just become heavier and more inefficient . The cost of keeping the structure going, its eventual failure or both will be even worse. Ask any civil engineer. That's what happens.
Taking the EU first, right from the start the objective at the heart (Germany and hitherto France) of the "European project" has been the creation of a barely democratic European superstate. It was top down and imposed by a small political elite who will not readily give up their heady power. A sort of United States of Europe. Only it isn't. The USA was created bottom up by disparate groups of refugees arriving with the united aim of securing a better life away from the restrictions, persecution (often religious) and general unpleasantness or simple lack of opportunities wherever they left behind. They wanted to be in America and start a new life. To faciliate this they wiped out most of the people already living there but that's another story. The newcomers wanted to be joined together as Americans first even if they retained some aspects of their home cultures. Even then the emergence of a single federal state wasn't easy and took a bloody civil war.
The EU is not an America and never will be. It was created/imposed top down as an eventual overriding superstate which would take over and subordinate a wide variety of nations, eventually reducing their sovereign parliaments to a status akin to county councils. The vast majority of the citizens didn't and don't want that imposition and have never even been asked if they do.
The difference between "natural" and "unnatural " is therefore that USA was born with the enthusiasm and support of its people whereas the EU especially in superstate form is not.
Even more "unnatural" ,the Euro was mooted as a single currency so as to make political union or a superstate essential. Its promoters knew that and were entirely cynical about it . To them the end justified their means whether "people" liked it or not. Without a single government it is inevitable that a joint currency will fail . Each member state will have different cultures,priorities, attitudes to spending and borrowing borrowing and social structures. The actions of the profligate and lazy will threaten the prosperity of others. When the music stops the strongest, most hardworking and prudent will have to pay for the acts or omissions of their fellow members. That's how it feels to be German right now. As an unnatural currency to bolster or hasten an unnatural superstate, the Euro was a doubtful runner from the start. It was made even more so when criteria to join it were bent so as to widen membership. Everyone knew that Greece for one never really met the criteria and yet for political expediency blind eyes were turned and it was waved through.
Now we have the predictable Barroso and others whose personal future is at stake and dislike the idea of P45s all round ,calling for yet more unity,-banking this time,- to reinforce the failing structure. They would go on for ever adding sticking plaster, sandbags or whatever it took to add to the weight and drag of the whole superstate dream/nightmare while refusing to look further into the future to see the enormous black hole awaiting.
Enough of medication, reinforcement or whatever . It's time to call it a day and let nature take its course. There will be pain but much less than if the state of denial continues and torrents of potentially productive money are diverted to the superstate cause. Some states have to leave the Euro and some (Britain and the probably the Nordics) formally leave the superstate group to re-form into an EFTA type free trade area which is where they started. There is no reason why the free trade arrangement should not encompass both the superstate members and the rest . Ideally it should.
The time to accept these realities is now. Given strong "Let's do it" leadership Britain could lead the breaking of this moribund mould and define this new vision of the future. Will it do it? Hard to say. Its government's recent track record of determination in the face of hard decisions and adversity is not encouraging. Even their own MPs make their knees knock. More treacle and fudge could be on the way . If so all Europeans will ultimately pay a high price.
