18 May 2009

Europe waits for Germany to come to the rescue | Anatole Kaletsky: Economic view - Times Online

I heard on TV yesterday, in an interview with a Brit journalist with an American socialite, that the world financial crisis is the fault of the USA – as the presenter put it, “you lot”. It has seemed to me from the start that the EU is a fundamentally unstable construct and my observations overseas has been that they have tried to emulate the conspicuous consumption of the Americans without the elevated productivity of the American economy.

Now, I have finally seen an analysis from within the EU that confirms my beliefs, despite the rhetoric blaming the US for all the ills of the Old World. Apparently:

“Last Friday the European Commission published what were arguably the most catastrophic economic statistics produced by any official institution in the capitalist world since 1945…What these statistics confirmed is that the credit crunch has been a far greater disaster for Germany and most of continental Europe than for the US and Britain. In fact, it is Europe that faces a genuinely unprecedented economic crisis, whereas the recessions in America and Britain are broadly similar in scale to the ones of the past three decades.”

Europe waits for Germany to come to the rescue Anatole Kaletsky: Economic view - Times Online

Essentially, the powerhouses of the EU economy have been buoyed up by bad loans from wealthy Europe to developing Europe. As the fictions of these loans becomes apparent a credit crunch causes crises in many of the European “provinces”. This can usually be dealt with by instituting draconian economic and fiscal policies but that is no longer possible because everyone now uses the common Euro. Unless Germany bails everyone out there will be a crash beyond the memory of everyone alive. The only ones who will be cushioned against it will be Britain because they did not jump headlong into the Euro.

God bless the Euro-sceptics! and thank goodness someone is willing to speak with honesty. Let’s just hope that those who are trying to scapegoat the USA don’t push for revenge for their failed economy.