Europe – update (9)

In a series of posts I have been tracking the developments in Europe for over a year. These posts can be viewed by using the key “Europe” in the search box to the right. In May 2012:

I wrote:

This [break-up of EU] scenario comes in a range of flavours – from a semi-managed political process to train wreck. I am not, at present, willing to speculate on which of them is likely to eventuate but will instead focus on the steps on the way to the inevitable end of the Euro zone.

A year down the track I feel I can be a bit more specific in my predictions of how the disintegration of Europe will unfold. I will still not commit to a timeline but will at least shed more light on the processes we are going to witness in the coming few years. This post will reference a number of previous essays on da-boss so please open and read them as they are invoked.

One knows things are seriously wrong when the lunatics are in charge of the asylum. This sadly is the case in Europe these days. The leader of the second largest (although shrinking) economy in Europe publicly demonstrated the other day that he is delusional:

“What you need to understand here in Japan is that the crisis in Europe is over,” he told Japanese business leaders on a trip to the Far East.

The depth of ignorance displayed by Monsieur Hollande in this statement is mind-boggling. The acute phase of the crisis in Europe (aka economic collapse) is not “over”. Rather – it has not yet begun! What we have been experiencing in the last 5-6 years are the ripples of the financial crisis. The root cause of the problem is the fact the European economies had lost their competitiveness in the 20-30 years prior, mainly due to bloated social welfare. The response adopted by the politicians was a self-negating mix of spending and austerity. More importantly, the weak and irresponsible were not allowed to fall but were propped up by the few healthy European economies instead. The real issue – high overheads for businesses and workforce poisoned by the socialist mentality – were never addressed. As a result Europe is now in double-dip recession with a ballooning debt and no chance of recovery.

When the patience of the creditors has run out the real crisis will manifest as the economic collapse. What has so far been an accounting exercise of accumulating debt to pay for day-to-day spending will start having a dramatic social impact. One common-sense analogy would be of a person using their Visa to top up the home budget. They are already in financial crisis – they have to keep borrowing just to keep going – but the “real” crisis will manifest when Visa closes their credit account. That Monsieur Hollande cannot see it is simply astounding.

When I write about dramatic social impact, this is exactly what I mean. School teachers, fire-fighters and policemen not being paid, hospitals closing, state pension payments ceasing. This will result in widespread social disruption, riots, escalating crime, vigilantism – you name it. So, why was da-boss unwilling to offer more definitive predictions last year and what has changed since?

Europe – update (10)


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