Professor George Irvin makes another attempt to explain why the European leaders mishandling of the financial crisis will only make things worse: In Brussels there seem to be a total lack of understanding of the diversified emotions amongst the euro zone’s citizens – mixed with an ignorant perception that a “one-size-fits-all” policy is the way to fix the problems. However, at the moment any sense of community spirit we Europeans might have is eroding.
“Think of what would have happened to Louisiana after Katrina had it been dependent on selling its own dollar bonds to the international market to raise money!”
“Another EU debt crisis and another inadequate bailout with more strings attached. In the coming year we shall almost certainly see more Club Med countries attacked by the bond markets, and told by their euro zone/IMF masters that the only alternative is to accept dramatic cuts and to slash ‘unaffordable’ welfare spending. In the absence of fundamental euro zone reform, piecemeal fire-fighting will fail,” professor Irvin writes in a blog post after the Irish bailout.
As professor Irvin rightfully points out, we Europeans have never had a real common community spirit.
The European Union is the result of – in this bloggers opinion – a well-meant, but unrealistic, political idea of equality and cohesion.
An ideology that in theory is a very nice thought, but in reality very hard to achieve.
The cultural differences in Europe has roots going back several centuries – it’s not gonna change in a mere decade or so.
George Irvin believes that a shared political identity amongst Europeans has to be forged.
He may be right, but again; it will take time – probably lot’s of time.
Meanwhile – our political leaders are trying to fix things by implementing systems and mechanisms that might work in one place, but causes anger and frustrations elsewhere.
In an article published back in 2008, I said that this crises calls for leadership of the unusual kind – the kind that one might be willing to die for.
At that time I did not see any political leaders in Europe at that possessed such qualities.
I still don’t.
Well, without further comments, here’s honorary professor at the University of London, George Irvin:
“The problem is that Europeans don’t want to accept that currency union means genuine economic and political union.”
Another EU debt crisis and another inadequate bailout with more strings attached. In the coming year we shall almost certainly see more Club Med countries attacked by the bond markets, and told by their euro zone/IMF masters that the only alternative is to accept dramatic cuts and to slash ‘unaffordable’ welfare spending. In the absence of fundamental euro zone reform, piecemeal fire-fighting will fail.
Ireland’s pre-emptive drastic austerity measures taken last year were meant to have solved its problems.
The aim of public expenditure reduction was to reassure the financial markets that the government was serious about cleaning up the damage to the banking system caused by the collapse of the country’s huge property bubble.
According to Jean-Claude Trichet, speaking earlier this year, Ireland’s cuts provided a role model for Greece.
But now it’s all gone wrong.
Self-imposed austerity has meant that Irish GDP has contracted by over 10% since 2008 and its GNP even more so; the latest unemployment figure stands at 14% and rising; the budget gap is enormous and the country’s largest banks need bailing out.
As in the past, with jobs disappearing, the young are emigrating.
At the heart of the crisis is double denial: in Ireland, while the Finance Minister, Brian Lenihan, has spent weeks denying that his country needed help, Ireland has turned increasingly to the ECB for money it could not find on acceptable terms elsewhere.
Denial too in Europe: the euro zone and the IMF have come to the rescue with a package of €90bn (to which Britain, whose banks hold nearly half of Irish banks’ debt, has contributed about €10bn).
But the stringent conditionality imposed will push a stricken economy deeper into misery.
Euro-sceptics claim it’s all the fault of the euro: if only Ireland had kept the punt and could devalue, they argue, all would be well.
The argument is faulty for two reasons.
First, there are numerous examples of countries with their own currencies which have been pushed into IMF receivership: Mexico in 1995, Asia in 1997, Russia, and so on.
Secondly, Ireland is devaluing ‘indirectly’ through pushing down wages: that’s what the phrase ‘internal devaluation’ means.
No, it’s not the euro that’s at fault; the problem is that Europeans don’t want to accept that currency union means genuine economic and political union.
In the USA, the individual states may have considerable autonomy (just as Canadian provinces or German laender do), but their economic survival is ultimately the responsibility of the federal government which issues bonds and can borrow on international markets.
Think of what would have happened to Louisiana after Katrina had it been dependent on selling its own dollar bonds to the international market to raise money!
Others will argue, not without reason, that Europe has no polis, no shared political identity and culture.
They tend to forget that until the mid-19th century, Americans identified far more with their home state or region than with Washington—and some still do.
A shared political identity needs to be forged; it is the product of a vision which transcends local boundaries.
At the moment, economic crisis is eroding any sense of European community we might have.
That’s what ultimately could kill the euro.
By George Irvin
- EU Budget Talks Collapse
- Warns Against Euro Zone “Elite”
- Brussels Tells Athens To Shut Up And Take The Pain
- Bundesbank: Ireland Will Destroy The Euro Zone
- EU Member States Disagree On Debt Figures
- EU’s Bank Rescue Turning Into Political And Economic Catastrophe
- EU Leaders Trigger Another Market Panic
- From Greece With Anger
- Greece About To Enter The Death Spiral
- A European Revolution by December?
- €90bn Irish bailout ends in turmoil – Now Europe fears crisis will spread – The Guardian (news.google.com)
- IRELAND BAILOUT: Britain pays out billions as country implodes (dailymail.co.uk)
- Banks’ bailout news drives Irish government to brink (thestar.com)
- EU bailout endangers Irish government, slams banks – BusinessWeek (news.google.com)
- Ireland to prune its banks as part of bailout (msnbc.msn.com)