Why should we in Australia care? Well, many of us have friends and family in Europe. That is reason enough. Many of us also care about reason and democracy.
Another key reason is that Europe is China’s biggest market. If the Euro collapses, as now seems almost inevitable, Europe’s buying power will also collapse. China’s exports will crash, and China will stop buying Australian coal and iron ore. Australia not in good financial straits now, thanks to the most incompetent government in its history. It will soon be worse, thanks to the EU.
Europe is a real place, not a video game, so it is governed by people significantly less intelligent than the average game player.
Good game players know they must use resources efficiently, never run out of gold, and ensure their income stream always equals or exceeds their expenditure. They have to co-operate with others, but act independently and take responsibility. They must have a firm grip of the mechanics of the game – what constitutes reality – and act both thoughtfully and decisively, because actions have consequences.
Fortunately, Australia still has some politicians who understand these things. Tony Abbott’s speech during President Obama’s visit to Federal Parliament mentioned De Toqueville’s remark ‘America is great because America is good.’ He suggested that being good involves loyalty and hard work and sacrifice. He was roundly criticised in the local media for being divisive.
America has been good and great because it was founded by people who were great and good, and who understood what game players know – you can’t buy food or clothes or education or a castle if you don’t have any gold, and you won’t have any gold if you don’t do any work.
In our time the idea that the people who have done the work and earned the gold deserve better armour or bigger castles is considered divisive, unfair, and an example of the failure of unrestrained capitalism. Everyone deserves the same! redistribute the wealth! So what if I have laid on my couch eating pizza and watching porn for the last twenty years? I want to live in Hollywood too.
The opinion that no one should be allowed to fail or be in need, that everyone deserves an equal share (except for politicians and bureaucrats, who are more equal than others), has taken firm hold in Europe.
The average US citizen still thinks personal freedom (and responsibility) is more important than the government making sure your family gets its porridge in the morning. There is some hope for the US.
There are three major consequences of the implementation of any political ideology which refuses to accept economic and social reality. In the last week, all three have been in evidence in Europe.
First, the end of democracy. People may take advantage of whatever pointless handouts desperate politicians toss into the cage, but the hoi polloi are generally wiser than their rulers, and will not be fooled forever. Consequently, the people must be stopped. From Brendan O’Neill:
IMAGINE how much international hand-wringing there would be if, say, Nigeria and South Africa decided to club together and put extraordinary pressure on Swaziland to get rid of its elected leaders and replace them with unelected suits.
There would be uproar. Western politicians would hold press conferences to denounce these coup-like antics on the Dark Continent. The UN would have an emergency session.
Yet when the same thing happens in Europe, when powerful West European nations use extreme financial pressure to force a change of government in less powerful European nations, no one seems to mind.
During the past week, something extraordinary has taken place in Europe: two elected governments have been swept aside, largely on the say-so of Germany and France, and replaced by gaggles of unelected experts.
The fall of Greece’s democratic government was assured when its prime minister, George Papandreou, suggested an EU austerity package for Greece should be put to a referendum.
The package, agreed by Brussels on October 26, stipulates that Greece will get the emergency bailout funds it desperately needs only if it agrees to raise taxes and slash public-sector pay. So Papandreou felt the Greek people should have a chance to say yes or no to it.
Big mistake. As we know from the hissy fits they threw when the Irish, Dutch and French dared to say no, nee and non in referendums on whether to pass the EU constitution, the oligarchs in Brussels hate nothing more than the thought of hoi polloi having a say on their policies.
This is one time when the too muched quoted excerpt from Brecht’s The Solution really is apposite:
The People have frivolously thrown away the Government’s confidence and will only regain it through Redoubled Work. But wouldn’t it be simpler if the Government simply dissolved the people and elected another?
Brecht, incidentally, would certainly have been on the side of the Euro-stalinists rather than the people. He really did the think the people were hopeless and should be replaced.
Second, ineluctable and obstructive government regulation in even the most trivial areas of life.
UK MEP Paul Nuttall said the ruling made the “bendy banana law” look “positively sane”.
He said: “I had to read this four or five times before I believed it. It is a perfect example of what Brussels does best. Spend three years, with 20 separate pieces of correspondence before summoning 21 professors to Parma where they decide with great solemnity that drinking water cannot be sold as a way to combat dehydration.
Spanish banks, under pressure to cut property-backed debt, hold about 30 billion euros (US$41 billion) of real estate that’s “unsellable,” according to a risk advisor to Banco Santander SA and five other lenders.
“I’m really worried about the small- and medium-sized banks whose business is 100% in Spain and based on real-estate growth,” Pablo Cantos, managing partner of Madrid-based MaC Group, said in an interview. “I foresee Spain will be left with just four large banks.”
Spanish lenders hold 308 billion euros of real estate loans, about half of which are “troubled,” according to the Bank of Spain. The central bank tightened rules last year to force lenders to aside more reserves against property taken onto their books in exchange for unpaid debts, pressing them to sell assets rather than wait for the market to recover from a four-year decline. … Cantos says that prime assets can be sold at a 30% discount, while portfolios comprising land, residential and commercial real estate may only sell after 70% discounts.
“Therein lies the problem,” he said. “Banks have already provisioned for a 30% loss, but if you are selling at 70% discount, you have to take another 40% loss. Which small and medium size banks can take such a hit?”
Very few. Without an end to endless regulation and endless spending, no bailouts will make a difference.
The politicians and bureacrats will fight any remedy tooth and nail. But unless there is a fundamental change in thinking about government and spending, Europe will fall.