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The ECB (European Central Bank)'s plan
to "kick the can down the road" as long as possible requires
kicking in the teeth of the eurozone periphery
countries. It could lead to uprising.
Europe is supposed to be the land of
compassion and enlightened social policy. America is supposed to be the
domain of "jungle capitalism" and brutal discrepancies between rich
and poor.
Your editor heard this over and over
as a student abroad in the late '90s. At the Oxford Union, a student debating
society, there were spirited discussions on the treatment of the underclass.
At Pulacky University in the Czech Republic, in the
afterglow of the Velvet Revolution, we were reminded that America, too, had
its brutal edges like the communists. Even the laid-back Aussies (during your
editor's study time down under) thought the Yanks a bit harsh on social
policy.
And yet now it is Europe, not the
U.S., determined to grind the masses under the heel of a crony capitalism
boot.
The ECB (European Central Bank)'s
determination to force "austerity" on the periphery countries --
and to avoid debt restructuring at all costs -- is driving multiple
generations to the brink.
There are families that can barely eat as neither mother nor father can find a
job. There are millions of young and unemployed with no real hope of an
economic future. Tens of thousands surround Greek parliament almost daily.
And meanwhile ECB bureaucrats, that enlightened bunch,
can only think of the bankers and their ilk.
Europe's determination to "kick
the can down the road" at all costs actually involves kicking in the
teeth of the peripheral eurozone economies, forcing
them to endure deep recession or even outright depression conditions for
years to come.
Bankruptcy is frowned on in polite
company, but there is a humane reason it exists. Beyond a certain point --
when the debt load becomes intolerable -- the prospect of financial freedom
vanishes completely. Without bankruptcy, the noose of debt (interest on top
of interest) can tighten around a man's neck for life.
Allowing for bankruptcy is not just humane, it helps keep the free market healthy. Debtors who
find themselves in impossible situations are given a fresh chance to become
productive again. And creditors who lose lending capital become more diligent
(and thus more productive) in whom they choose to lend to.
Bankruptcy can happen to countries
too. When a country is told "you are not allowed to default at any
cost," this is where the moral questions get sticky. Should the debt
sins of one profligate generation be passed on to the next? What about the
next generation still, and the one after that?
And what if the great weight of debt
was born of foolish loans -- stupid credit from stupid banks? Should the
leverage-happy lenders be protected at all costs? Should the perpetrators and
purveyors of such suicidal leverage be enabled to walk away scot-free?
What Europe is practicing has nothing
to do with human compassion, or even free market capitalism. Instead it is
the worst form of Darwinism. "Survival of the fittest" has simply
come to mean "Survival of the most connected."
The europe banks are being looked after because
they have the best connections, which they paid for with hard cash and soft
influence. Those with deep hooks in the system have ensured their interests
will prevail. Those without are left to go hang.
It has been predicted by many that
America's experiment with leverage and debt is going to end in disaster. Your
editor is fairly convinced, though, that the USA is not where such disaster
is likely to strike first.
At some point -- perhaps quite soon --
the brute-force social inequalities in Europe are simply going to explode,
like oil drums full of kerosene sitting in 100-degree heat. Citizens of
Greece, Ireland and Portugal are going to realize they are not just getting a
bad deal from the ECB, they are being financially mauled.
When this realization gathers full
force, we could see a sort of "Fiscal Arab Spring" in the eurozone, embracing multiple generations of pissed-off
and disenfranchised citizens. Europe's current crop of leaders, determined to
sacrifice the economic future of multiple countries on the altar of the
banks, will be told where they can go.
At some point, the citizens of
Europe's periphery countries will remember what democracy is for. And if
their rising voices are not heard, there will be blood and fire on a scale
not yet seen. And the fallout will rock markets globally.
It will be a fairly awesome sight to
behold. (As will the euro's spiraling decline --
and the dollar's jaw-dropping rally -- when this plays out.)
Stepping back a bit: What is so
frightening right now, not just in Europe but China and America and Japan
too, is the presence of fraud-fueled "Lehman
2.0" catalysts threatening to explode.
One could say that the 2008 financial
crisis was the mother of all wake-up calls. But instead of actually waking
up, the powers that be slammed the alarm clock, choked down a fistful of
Ambien, and rolled back to sleep.
As a
result, the world is going to get an even bigger wake-up call in the
not-so-distant future.
Justice
Litle
Taipan
Publishing Group
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