Europe Finally Admits A Monetary Union Leads To "Increased Unemployment And Social Hardship"

Tyler Durden's picture

It was back in December 2012 when we summarized the biggest failing with the Eurozone: a continent in which due to the lack of a flexible currency (also known as a gift to Germany and what otherwise would be a very, very expensive Deutsche Mark) the member nations were unable to devalue their way out of depression. Namely, that absent the ability to engage in external devaluation, Europe's troubled nations (i.e., most of them) had only one option: internal devalution, also known as plunging wages.

Here is what we said:

Most European countries (including France) face a desperate need for external devaluation, which is impossible under a monetary union, leaving only internal devaluation as an option. This is where the much maligned concept of austerity comes in:  from a macroeconomic perspective, austerity is not so much an exercise at moderating the pace of debt increase (as neither Spain nor Italy have reduced their rate of debt issuance), but of gradually becoming more price competitive with Germany: a key outcome that will be needed for the Eurozone to have any chance of survival, i.e., lowering sticky unemployment rates from levels that virtually assure social "disturbances" in the months and years ahead.



And herein lies the rub: because while protests against “austerity” (which as we observed recently has still not been truly implemented in Europe, and certainly not in Portugal or Spain) are a daily event in most PIIGS nations, “you ain’t seen nothing yet.“ The reason: to achieve the unavoidable macroeconomic rebalancing, and to collapse the spread between soaring labor costs in the periphery and those of Germany (see chart below), the bulk of European countries will need to see wages collapse by anywhere between 30% and 50% to compensate for the lack of state-level currency devaluation optionality. And yes, this includes France.

This much is now accepted by all. Our conclusion, however, demanded more: an actual admission from the brutal oligarchs of the artificial monetary union whose only purpose -like everything else in the New Normal - is to facilitate the transfer of wealth from the poor to the rich.

... telling a continent, which in its desperation is hopeful and confident that the worst is behind it (as its lying politicians take every opportunity to note) that the most acute of standard of living collapses is yet to come, is borderline cruel and unusual. So we will just keep our mouths shut and let Europe’s politicians bring this depressing message to their people. We are confident the reaction will be more than dignified.

Well, today the unthinable finally happened when the following stunner was released by László Andor of the European Commission, in a press release discussing the "Employment and Social Developments: Annual Review highlights need to address risks of in-work poverty":

Social dimension of the EMU


The still growing macroeconomic, employment and social divergences threaten the core objectives of the EU as set out in the Treaties, namely to benefit all its members by promoting economic convergence and to improve the lives of citizens in the Member States. The latest review shows how the seeds of the current divergence were already sown in the early years of the euro, as unbalanced growth in some Member States, based on accumulating debt fuelled by low interest rates and strong capital inflows, was often associated with disappointing productivity developments and competitiveness issues.


In the absence of the currency devaluation option, euro area countries attempting to regain cost competitiveness have to rely on internal devaluation (wage and price containment). This policy, however, has its limitations and downsides not least in terms of increased unemployment and social hardship, and its effectiveness depends on many factors such as the openness of the economy, the strength of external demand, and the presence of policies and investments enhancing non-cost competitiveness.

So there you have it, not from some fringe blog or some radical, foaming in the mouth euroskeptic, but from the bastion of that most artificial construct of modern times itself: a "united Europa."

And now, we hold our breath for the reaction from the general public upon their realization that for the past decade they were openly lied to every single time a politician opened their mouth, and all they have to show for it is record high unemployment and the worst standard of living for most (if not for the top 1% - they have never had it better) in recent European history.

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blindman's picture

and fiat, centrally controlled, "money";
systemic sovereignty of the extension of
debt and transcription, conscription and
other -iptions or options.

NidStyles's picture

Someday we can say the same about the US and get rid of these fed assholes.

blindman's picture

they lend you your own money and then
charge you interest for subverting your
sovereignty, then we dumb and blind ass
hats thank them.
it is a funny planet of people.

knukles's picture

"Which can easily be rectalfied through greater fiscal integration, greater rule and law making autonomy of the EU's governing bodies and complete and total enslavement of its peoples"
        -Juan Valdez Dieselbloom

Chief KnocAHoma's picture

Bubba - Hey Forrest I got an important question to ask you.

Forrest - What?

Bubba - If the FED is buying $75-billion a month of debt that will ultimately be paid back by the tax payer, why wouldn't they just eliminate the income tax for one year? That would stimulate the economy and provide real needed funds to main street.

Forrest - You stupid black shrimper! The FED doesn't give a fuck about main street. They are propping up the banks and Wall Street.

Bubba - Oh... well in that case how would you like to go in the shrimppin' bidness with me?

Forrest - Ok.

Bubba - I got it all figured out. Some many pounds of shrimp to pay for the boat... some many for gas... we can sleep right on the boat... ain't gotta pay no rent... and hey all the shrimp you can eat!

Forrest - What about Obama care? How many pounds for that? And unless they do forgive our taxes ... how many pounds for Uncle?

Bubba - Fuckit! Let's just go on disability!


Debugas's picture

because americans would spend the money buying imports from China

Gankfest's picture

We live in a turd sandwich...

LMAOLORI's picture



How long before our leaders admit QE doesn't help Main Street?  (The 12th of NEVER)

Wall Street adviser: Actual unemployment is 37.2%, 'misery index' worst in 40 years
Yen Cross's picture

 Look at the French Employment chart.  Hollande must have been inverted when he made this statement!


wintermute's picture

Julie Gayet would know if he was inverted at the time.


knukles's picture

Just proves looks do not a brain make.
He fucked her for her body.

No wonder his "misses" partner got mad
She can't even "divorce" the ugly little dwarf.

I know there's more than one oxymoron in there.. including him

Joebloinvestor's picture

I thought they would wait till France went belly up.

Greenskeeper_Carl's picture

This monetary union has gotten us deeper into a hole with more debt and more unemployment. So obviously the solution is less sovereign independence and moar central planning. Don't worry guys, they got this shit under control now

Spungo's picture

Can you imagine how fucked these countries would be on a gold standard? Their entire economies rely on the ability to print money out of thin air. This is pathetic.

Dick Buttkiss's picture

If they'd never gone off the gold standard, none of this would have happened.


NoDebt's picture

"limitations and downsides not least in terms of increased unemployment and social hardship"

And on the other side of the card it says:

"... but it's SO important we have it, that we're willing to accept that, as witnessed by... well... pretty much ALL of our actions to preserve it, regarless the cost."

PontifexMaximus's picture

Bullish. Mario is a reliable chap!

Dr. Engali's picture

Well duhhhh.........Paging Nigel Farage.

StychoKiller's picture

Putin can't believe it either! :>D

migra's picture

What do those people over there have to do to end the european union because it obviously is not working. That appears to be the only answer left. 

Occident Mortal's picture

The euro is the dumbest idea ever.

What were the benefits supposed to be?

How can you have a single monetary policy that can simultaneously get the best out of 17 separate economies with 17 different tax codes, 17 different sets of laws and 17 different demographic profiles?

Sudden Debt's picture

back in the day, you had to carry a bag of different foreign currencies to travel.
getting all the currencies took you a week.

Anglo Hondo's picture

Never.  Back in the day, 60s and 70s, I went to my bank, told them what I wanted, paid them, and collected the foreign currency the next day.

Never a problem (except during currency controls under the Labor govt.)



FreeMktFisherMN's picture

that 'inconvenience' is irrelevant in magnitude compared to the hellish result of integration. And I would add that gold is money and ultimately purchasing power is based on how much gold would back any of these currencies, so gold is the common denominator. 

FreeMktFisherMN's picture

It's called the New World Order. They are essentially trying to create a modern day tower of Babel. 

The benefits were always for the elites/masons/skull and bones/bankers/politicians/Zionists.

FreeMktFisherMN's picture

All prophecized in Revelation from the Holy Scriptures. God's will will be done. One of the big delusions out there is that America is the 'good guy.' Nothing could be further from the truth. Integral participation in the usurious banking system of inflation and deceit, 1.5 to 2 million unborn children of the Lord murdered every year, increasing #s of people accepting perversions like LGBT both in the legal system as well as in churches, foreign policy that propagates the false theology that Jews are saved even though they do not accept Jesus Christ as their Savior (when the Bible states that NO one comes to the Father but through the Son), foreign policy not of Just war (in defense) but rather of provocation a la Roman Empire, the list goes on. 

Debugas's picture

from German exporters point of view euro was a very bright and great idea

Sudden Debt's picture

Anybody who has children will understand.

1. if you give any of them a gift... be prepared to give them all a gift
2. if you only have one gift, don't give them anything.

otherwise you're the bad guy.

So for devaluation through printing. to who goes the free printed money?

maskone909's picture

But certainly a blanket currency that encompasses debtor and creditor nation's could never lead to failure! Preposterous!

BanksterSlayer's picture

Surely Obama can fix everything in EuroLand when he goes to visit them at the Spring Equinox.

"From the Netherlands, the president will travel to Brussels on March 26 for a U.S.-EU Summit with the Presidents of the European Council and the European Commission. This will be President Obama's first visit to the EU institutions. While in Belgium, the president will also hold bilateral events with Belgian Government officials and with the NATO Secretary General."

StychoKiller's picture

Sign'em up for Obamacare!  (Kill two birds with one fscked-up mess!)

Sudden Debt's picture

The europe council is where politicians go to retire.

When they're burnt in their own country, they go work for the european council.
Nobody really votes for them.
nobody knows what they do.... besides spending shitloads of money.

Europe... is the retirement home with benefits.

Ghordius's picture

SD, you are completely wrong and it's shameful that you are still that ignorant about the EU while living and working in the middle of it

you are referring to the European Council. not to be confused with the Council of the European Union or the Council of Europe

the voting members of the European Council are the governments of the EU countries. which, in 26 of 28 cases, are not elected directly, but through majorities in the national parliaments, whose members are elected by you and me and others

Germany is represented by Merkel and her cabinet. don't tell me that nobody voted for Merkel's party (and her coalition member's parties)

France is represented by Hollande and his ministers. don't tell me that nobody voted for Hollande, or the parties of his ministers

the UK is represented by Cameron and his cabinet. don't tell me that nobody voted for Cameron's party (and his coalition member party)

it's a confederative setup. at it's center are the elected national parliaments, who in 26 cases can recall anytime their governments. too bad you don't seem to understand it. but perhaps you don't want to

Bazza McKenzie's picture

Look on the bright side.  The EU has created a whole new class of very well paid supra-state bureaucrats and politicians.  Surely that has to be a plus.

Save_America1st's picture

Nigel Farage has been bashing those Marxist douche bags over the head with this for how long now?

no more banksters's picture

There is nothing Marxist in those policies, they are purely Neoliberal.

angel_of_joy's picture

Centralization of decisional power is an ESSENTIAL tenet of Marxism.

Do your homework (i.e. read Marx), or shut up...

no more banksters's picture

Giving all the power to banksters is not. Do yours.

angel_of_joy's picture

Deleted (double post, sorry...)

Joe A's picture

There you have it. What economists and others warned about before the introduction of the Euro and what others have been saying ever since the currency was introduced (because they suffered the consequences) now our overlords in Brussels are finally admitting. So MoFos, report yourselves to the nearest police station to turn yourselves in for deliberately creating a faulty currency and wrecking economies and people's lives. The burocrats from Brussels have used a financial weapon of mass destruction on their own people.

I wonder what Farage will think of this statement and can't wait for another rant of his in the EP.

bh2's picture

"I wonder what Farage will think of this statement and can't wait for another rant of his in the EP."

Also should be satisfying to watch the dour pusses of Barrosso and other preening bureaucrats who have brought about this disaster and now must own it.

falak pema's picture

maybe they will move to a two tier euro. Mutti says yes and Draghi grows a second head. Two headed central bank. 

Imagine the stampede. Which head to you follow and which head do you kick like a football? 

pashley1411's picture

And to think, that silly Hitler thought he needed tanks and dive bombers.   All Germany needed to do was run a (European) flag up a pole, pay other country elites enough to betray their countrymen, and let German industry do what it does best. Genius.

The end game is that southern Europe will look like our recent in-the-news Appalachia; the money and power are elsewhere, just rusty cars and mangy dogs.  


Joe A's picture

Some say this was already planned by the Germans when they were in the final losing stages of WWII. They just needed to be patient. Germany won WWII in Octobre 1989.

css1971's picture

Same applies to America BTW.