European Dis-Union: An Economic Crash Is Impending in Europe as More Than a Dozen Countries Face Financial Ruin, and an Economic Crash Will Likely Be Accompanied by the Fall of the EU
Scaliger, Charles, The New American
In a November 16, 2010 speech, European Union President Herman Van Rompuy warned that the eurozone economic crisis threatened the very existence of the EU. "We're in a survival crisis," Van Rompuy said. "We all have to work together in order to survive with the euro zone, because if we don't survive with the euro zone we will not survive with the European Union."
It wasn't supposed to turn out this way. The European Union--the triumphant culmination of a drive for European economic and political union 50 years in the making--was intended to set a new standard for transnational government, an experiment in consensual empire-building and a regional precursor for an eventual global political merger. The euro was a potent economic symbol of European unification, replacing a raft of national currencies like the peseta, lira, franc, mark, and drachma, which had endured, in name at least, for centuries.
For a brief interlude, European unification seemed irresistible. The euro soared against other currencies, including the dollar, and political milestones like a European constitution moved ineluctably forward, popular resistance in countries like Denmark and Ireland notwithstanding.
Then came the global economic meltdown, which brought the American economy to its knees. An early European casualty of the crisis was Iceland, which had managed to remake itself from a fishing economy into a center for international banking and finance. When Iceland's three major banks failed in the fall of 2008, the EU cobbled together a hasty bailout to keep the North Atlantic republic afloat, and the world breathed a sigh of relief. Iceland's economy was, after all, small enough for the eurozone to absorb its pain without a hiccup, or so it seemed at first.
A significant fact about the Icelandic meltdown was its magnitude: It was and remains the largest economic collapse suffered by any country in history relative to the overall size of the economy. It has left once-prosperous Iceland an economic wasteland as barren as the treeless tundra that covers the ancient Viking republic, spurring tens of thousands of Icelanders to seek emigration rather than wait for jobs that will never be revived. So severe has been the economic and political fallout from the Icelandic debacle that Icelanders are now preparing to write a brand new constitution. The economic Ragnarok in Iceland has utterly overturned the social and political order in that oft-overlooked country, boding ill indeed for other countries now entering into crisis.
The next casualty of Europe's slow-motion economic disintegration was Greece. Touted as an economic miracle only a few years ago when the Greek economy was booming, the modern heir of Athens, Sparta, and Byzantium has been transformed, over a few calamitous months, into a hapless ward of the European Union, her finances and government utterly held hostage by heavy debts and burdensome conditions imposed by her creditors.
But in hindsight, investors should have anticipated the Greek collapse. Although the Greek economy grew at over four percent per annum from 2000 to 2007, Greece's socialist government had been running extraordinarily high deficits for decades. The ratio of public debt to GDP has been 100 percent or more since the early '90s, in itself evidence enough that the Greek economy rested on the shakiest of foundations. Yet Greece was welcomed into the EU and for years managed to conceal the real condition of her national balance sheets by various creative accounting tricks. In 2010, it was revealed that the Greek government had paid a number of global finance banks, including Goldman Sachs, hundreds of millions of dollars to help conceal Greece's true level of indebtedness from, among others, EU regulators, allowing the government to live far beyond its means.
When the world economy imploded, the pitiful slate of Greece's finances was soon laid bare. …