Like many Americans who have watched the economic crisis in the Eurozone, I found myself wondering several times over 2011, "Why can't they get their act together and fix this? Don't they realize what's at stake?"
I also scratched my head in wonder several times at how the world's markets kept falling for every new "fix," no matter how unrealistic, because of an underlying belief that "in the end the politicians will do what they need to do and solve the problem."
So in two trips to Europe as the end of 2011 neared, I decided to look at the Eurocrisis from a political perspective and I've come to the conclusion that the political system is incapable of solving the problem and probably will completely fail to do so.
The markets will, sooner or later, figure this out.
So how is it possible that political leaders across the Eurozone will fail to come to rational terms around a common solution given the horror many believe awaits each of their countries in the wake of an economic collapse? As a political strategist looking at the problem the answer became clear to me -- the problems Europe's economic system has created are so great they have overrun the ability of the political system to solve them.
For the average American to understand how impossible the political situation is, I want you to try a simple exercise:
Imagine the United States. There is no president. There is no federal government. Instead Rick Perry is the president of Texas. Jerry Brown is the president of California. Andrew Cuomo is the president of New York. Forty-nine presidents of 49 states want Andrew Cuomo to tax Wall Street transactions to pay for unemployed citizens in the nation of Ohio, and those who overbuilt homes in the nation of Nevada. And Andrew Cuomo will no longer be president of New York if he does it. So Cuomo's plan is to ask President Rick Perry of Texas to raise taxes on oil to pay for the mess. That isn't going to happen either.
Let me be clear. Ohio and Nevada in the example above are all part of the United States. We sing the same "Star Spangled Banner." Watch the same television shows; speak the same language. We actually have a president and a federal government and our political system has become so dysfunctional that we can't agree on a 12-month extension of a payroll tax cut.
Now back to Europe. France speaks French, Greece speaks Greek, the Germans speak German. They fought world wars on each other's soil. There is not a single political party that exists across the European continent. Yet the markets continue to believe that the leaders of Europe will somehow come to agreement and solution when the greatest democracy the world has ever known cannot come to agreement on solving a similar albeit more shallow crisis here in the United States.
When the markets figure out the futility of the political situation it will be the markets and not the political leadership that will control events. And the impact on the lives of millions will not be pretty.
Our founders believed in capitalism. They believed that capitalism would be the engine of innovation and economic progress that would build a new future. But they knew that capitalism left to run amok would roll rough shod over everything in its path. That is why they believed that capitalism had to be subservient to democracy and not the other way around. Their worst nightmare was the notion that capitalism would take control and overwhelm the political leadership and democracy itself. The world may have come dangerously close to realizing the nightmare and not the promise of our founder's vision in the great collapse of 2007 and its wake.
In 2012 Europe may prove we have not yet escaped. Politics and economics are the same and broken.
Follow Joe Trippi on Twitter: www.twitter.com/joetrippi
Hugh Salmon: A Creative Insight Into the Euro Crisis
Mr. Trippi, there's an easy answer to that: they (that is our governments in Europe) cannot get their act together and fix this.
If they did get their act together to fix this, they would almost by necessity have to admit they were wrong for over 30 years.
The Euro was to be the crown on European cooperation, that started with The European Coal and Steel Community (ECSC) in 1951, superceded in 1967 by the European Economic Community (EEC, which later became part of the European Union). All these attempts were based on the principles of supranationalism to prevent armed conflict.
Come the 1970's the old mechanisms based on social-democracy started to fail: the US abandonment of the Bretton-Woods system, the oil crises of 1973 and 1979, and the stagflation in the 1970's And so, following the UK under Thatcher, European countries started down the road of neoliberalism/neocapitalism.
Effectively, this brought deregulization, monetarism, consumerism, and privatization. The idea of one currency was revived, not on the premise of supranationalism, but on one open market. That is to say an open market on "survival of the fittest" grounds. Since 1980, the distribution of wealth has brought an increased disparity of income.
Conservative policy makers, who mainly ruled Europe's economies now argued further monetarist policies had to be enforced. One market, with few regulations, and one currency was the course to be taken.
And so the euro was introduced in 1995, first as a "shadow currency", then as a cash currency (coins and banknotes) in 2002.
The increased disparity of income had, however, introduced problems. With decreased spending power, economic growth could be in jeopardy. Also, the financial restructuring necessary for joining the euro were so stringent, few, if any, European country actually qualified.
And so, the cooking of the books was introduced, by nearly all European countries.
Many European countries added pension funds of civil servants as an asset to change the balance between public income and debt. This worked in the short run, but had to fail in the long run. The same goes for the sell-off of public utilities (largely funded by tax payer's money after 1945) to private companies. In the short run, governments had a price to show for, in the long run, revenues generated by those utilities (power, water, rail transport and mail to name a few) dried up, and so were lost.
So the main problem of Europe has been the "penny wise, pound foolish" policies of our governments.
When Government expands beyond protecting use from force and fraud and starts to regulate society, deciding who deserves government help and who doesn't. Develops complex rules rules and redistributes wealth. Then it becomes inevitable that special interests will seek gains through the the political process.
The focus goes from wealth creation through the win-win world of markets and capitalism to the "dog eat dog" world of politics when everyone is using power to grab a bigger piece of the pie.
The seeking of political influence may come through campaign finance or through tribalism or just plain old "I scratch your back" politics, but once the political process expands beyond strict limits the process in inevitable.
Fix the process. Take power away from the politicians. That was the founders vision, not fear of capitalism.
Capitalism is the very epitome of dog eat dog.
Your company and mine sell competing products. Some customers prefer mine and some yours. We each specialize and get even better at meeting our particular customers needs. We and the customers all win. Or your company gets better at meeting the customers needs than mine and I go out of business. Now I and the resources my company was using will need to be used for something else valued more by consumers. So you and the customers win and I quite wasting valuable resources. I have to find something else to do that people value enough to pay for it.
Lots more examples. No dog-eat -dog fight to the death in any of them.
On this side of the curtain, they project propoganda to the people assuring them that they are "free", that they live in a "democracy", that "voting matters", and they project the image of a government representing a constituency of the people, debating and coming to legislative decisions representing the will of the people, however imperfectly. They put this propoganda out through their media arm.
Behind the curtain, their minions run around and organize the ostensibly elected government to do their bidding while SEEMING to do the bidding of the people. They do this through their lobbyist arm.
Capitalism as a political system. That's the political system you are living in today. NOT democracy.
IMPO...............One of the best examples in the World............is right here at home.
All GOOD business, is built on trust.
How can we TRUST our representatives in Congress, when their campaigns are financed through corruption?
Campaign finance as practiced in the United States is nothing more (and nothing less) than State sanctioned bribery.
Why be surprised by the outcome?
Our election system is morally bankrupt, fiscal bankruptcy will sooner or later follow.
No, no, no--capitalism isn't about markets. Capitalism is about capital. Markets don't rule in capitalism. Capitalists rule in capitalism.
When capitalists' desire for power begins to eclipse their desire for money, they become unresponsive to market forces. Responsiveness to market forces means to have a strong, functional political system. But a desire for power means to have a corrupt, disfunctional political system.
The problem is that, unconsciously, we've started to treat capitalism as a political system and not as an economic system. We've generally accepted the idea, for example, that taxation rates should be decided based on capitalist principles, rather than democratic principles. And everything democratic our government tries to do is immediately, and wrongly, denounced as socialism.
It's like criticizing an apple by saying it's not beefy enough.
So, bit by bit, our democracy is being replaced by a form of tyranny--a "political system" characterized by "the rich run everything, the poor are serfs, and it's every man for himself, dog eat dog." That is most assuredly NOT democracy. That is capitalism.
Our founders also believed in slavery. Capitalism only works when there is an exploitable underclass - slaves, immigrants, poor people begging for jobs.
Socialism is the way forward.
It is abundantly clear that this is the situation here in the US as well. We are so at odds with each other about the role of government that we are in a hopeless fix. The budgets skyrocket out of control, and neither party has the answers on what to do about it.
We're in for a very rough decade.
Until 2007 there were two types of countries, the poor with low debt and the rich with high debt. Since then there are the poor with low and high debt. The debt is not the problem. From my point of view, the problem is that the bond investors (banks, organizations, people etc) are not willing to accept that every investment has danger. EU and US bonds were secure and they believed that their money were safe. Today they have to accept the fact that countries as well as corporations fail. In my opinion the whole problem is psychological. Some people can't accept the fact that they will loose money. Investors have to pay their risks and greed. But till then, millions of people will suffer.
2012 we woke up in a beautiful country with the Greek media threatening us about the worst year so far. Why? Believe me, peoples faults are minor. Politicians are unable to do anything because they are not the ones who decide the last decades. The bankers and the investors are the ones who can.
Um Joe? (with a John Stewart eye stare)
Millions have ALREADY been affected...
but not just in Europe, Joe...
here in the US...too.
Old folks are riding a bus to Canada for drugs, Joe.
Young folks are unable to afford school or health care, Joe.
The US govt. can't get out of its own bloated, corrupted way to intervene, Joe.
Joe?
Joe?
A few hundred folks in Washington have the power to undo the mess that three hundred million of us have created? Not likely.
I am saying nothing here about the need to fight WWII. I am saying you are wrong about Governemnt spending fixing the great depression. If anything it prolonged it. Major Governemnt economists where predicting a return to depression if the millions of now unemployed troops where cut from the military too soon and if Governemnt spending was cut too sharply. Both happend and the economy boomed.
______________
Did they believe in bailouts?
I don't know why I do. I am thinking of deleting my account because I do not think the population is as naive about progressivism as they were in the past. If I examine my motives, it is because I am mad about government wasting lives and people supporting it.
Resentments are the foundations of reality of democrats and liberals. Resentments are why I am here. Resentments kill spirits.
But I think there are not enough of these insular mindsets left to make a difference any longer so I am wondering where you stand?
Just curious.
Thanks - Buck
So much of it is half-truth, to be charitable ... intentionally lying by ommission is my real suspicion. Although I am conservative, I see the same things being done in conservative media.
I suppose I feel compelled to challenge that as meagerly as I am able.
Regards,
Eva
We have social democracies which are a mixture of capitalistic basic structures with social programs. It has worked (at least in most countries) for the last 60 years. However at the moment adjustments have to be made, but it does not question our general system one bit. The system in the US has not proven to be better than ours, at least not for the employed working people. Born and raised in Germany after the war, our system has enabled me to be covered health care wise, being able to travel the world with long fully paid mandatory vacations, and a pension that is secured by the state of Germany and cannot be gamble away by some hedge fund managers.
I've got news for you all. It's over. No one wants to hear this or that ridiculous Keynesian theory or inane generalizations from Michael Moore.
Capitalism works. Big Government doesn't.
Get going people. Stop the goofing around. We've finally seen what's behind the curtain on the "Federal Government of Oz" and it ain't pretty. It's without exaggeration, an order of magnitude worse than any oil spill I have seen.
"Government Knows Best For You and Me" is the killer on both sides of the pond. Get out, exercise and get with the solution.
Nothing wrong with capitalism - it's the favored system around this planet, and has been for a very long time. No matter what system you have (and what would be a good alternative to capitalism?), you will have folks who figure out how to use it for their advantage, resulting in disparities between folks and groups of folks.
I have only two candidate hypotheses to explain your stunning ignorance:
1) http://www.theatlanticwire.com/entertainment/2011/11/michael-moore-has-very-nice-vacation-home/44832/
2) http://thehill.com/blogs/on-the-money/801-economy/166599-pelosis-net-worth-rises-62-percent-
Which one of these liberal sheepherders are you now basing your reason for being upon?
I have to ask if you really want help. You have to "want" help to get it.
What happened to Europe was financial colonization by excess debt hatched in WallStreet, aka WallStreet convinced bankers in Europe they had money to invest, when what they had was 30-to-1 overleveraged mortgage promissary notes. All American housing had to do was contract 3% and ANYONE who touched those notes just touched the third rail of WallStreet corruption. Sure that tanks the euro which was fragile to begin with (or didn't you read the article) but also China, Japan, and every other major economy in the world.
We have become the world's patsy and let our merchandise be locked out of many markets--even while we buy anything from anywhere. Result is our jobs fly out in the "giant sucking sound" Perot talked about all those years ago.
he was right. "Free" markets are a myth. Chinese recognize it and manipulate their markets and we are patsy enough to keep playing!
but gawd! don't say it! You'll be lambasted even though a good number of economists recognize that there is no "comaprative advantage" to discuss in such manipulated situations were nationalistic interests trump everything.
My beef is that only SOME economic views are allowed because the "free market" mantra suits corporations bottom lines. Others are treated like numskulls.
Hey if every American worked for $1.50 an hour corporations'd LOVE it and be glad to "bring jobs back". Until that happens they are perfectly happy to let the jobs be elsewhere as long as they are allowed to bring those goods here to sell with no tariffs. No way these corporate guys and the economists they own are going to agree that any economic theories against this mindset are even possible to discuss.
Our jobs are gone.
Sent overseas while we let anything and everything come here for sale. It isn't right.
The only thing that has worked against you are the people you have formed covenants with - namely the unions and the democrat politicians. I am sure you have never voted for them but there are plenty of old school republicans to blame as well.
You aren't as smart as you think.