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.