1956 Swan Song of Colonialism
In 1956 the last supporters of colonialism received a rude awakening, when gun boat diplomacy "a la Eden" was deemed unacceptable by the community of nations. The United Kingdom had completely misjudged global public opinion. The world had simply had enough! It was not about to run to the rescue of the last vestiges of imperialism. These events marked a milestone in political history. The axis of political power shifted away from Britain. The only two players were the U.S. and the Soviet Union communist bloc.
U.S. and Emerging Markets shall not save Europe
Looking at the current difficulties of the Eurozone, one is tempted to draw some parallels, as the Eurozone pleads for help. As in 1956, when Eisenhower wisely refused to support the UK in the Suez campaign, this time around the United States has told the Eurozone that it shall not be its savior. The U.S. tax payer's cash shall not be used to prop up welfare states, several of which are chronically unable to manage their financial affairs. Like Eden's crepuscular empire, Europe may well have overestimated its importance.
Eurozone looking more and more like a raft of the desperate!
The Euro may at inception have been a marriage of convenience but is now looking increasingly like Gericault's immortal work in the Louvre" Le Radeau de la Meduse" -- a group of desperate survivors floating on a raft and wondering who to next throw overboard. The raft is starting to creak and the sharks are circling!
Europe left in the dust by the rise of the BRICS
The Euro was to have been the coronation of a post-cold war wish on the part of the Europeans to both speak with one voice politically and to present a united front economically. Two factors, unforeseen at the time, have prevented this:
1. The rise of the BRICS, which has shifted the economic axis;
2. The confirmation of the U.S. as the dominant military and political power in the world.
Eurozone is a leveraged trade on China
The BRICS and, in particular, China have knocked Europe off its pedestal. In fact, one might argue that the Eurozone is being propped up by China, and in particular, by German exports to China. A hard landing in China, while unpleasant for all, shall be felt far more in Europe than in the U.S. The Eurozone, via German exports, is currently a leveraged bet on China. China kaputt -- Germany kaputt -- Alles kaputt!
U.S. shall outperform
Politically, the running during the major crises is made by the U.S. This is the world's major military power and, still, the keeper of the world's reserve currency. This status, despite the naysayers, does not look like it shall change anytime soon. Cheers of Schadenfreude by many Europeans, after the S&P downgrading of the U.S., were soon meaningless as the world rushed to buy U.S. Treasuries as a safe haven from the inability of Europe to do what it said it would do -- speak with one voice and act decisively.
Europe like UK in 1956 -- Must accept that the world has changed!
It is high time for Europe, like the UK was forced to do in 1956, to face up to the fact that the world has changed. I doubt heavily that battalions of private equity investors seeking bargains carpet bagger style shall be sufficient to avoid more crises and convulsions as Europe staggers to a solution.