This page has been archived and commenting is disabled.
The Coming Dissolution of the EU
In Europe, we already know the economy is in tatters. Italy is back in recession for the third time since 2008. Germany’s economy contracted in the second quarter of 2014 and will likely be in recession before the first quarter of 2015. France has registered zero growth for six months now.
None of this should shock anyone. From an economics perspective, Europe has been dead for four years now. Sure, there were little bumps in various data points here and there during that time… but overall unemployment remains at or near record highs, debt continues to grow, and human conditions in some regions now resemble third world countries.
However, the bigger story is one of politics. If you’ve been reading us for some time you know that a key theme for us is that politics drives everything in Europe.
Europe as a whole is socialist in nature. You will never hear a discussion of “how involved should the Government be in the economy?” in most of Europe; it is just assumed that the Government should always be involved to a significant degree.
The question is whether it should be a lot (the public sector accounts for 30% of jobs in Germany) or almost entirely (the public sector accounts for 56% of jobs in France).
In simple form, politics drives the economy and everything else in Europe. This is how Europe managed to squeak through a banking crisis that would have cratered any other region (it will still happen, but down the road). It’s also why the real European crisis will be political in nature. What I mean is that Europe will finally break apart based on politics, not finance or economics.
And by the look of things, it’s just begun.
I’m sure you’re aware of the fact Scotland attempted to break away from the UK earlier this month. What you may not be aware of is that fact that secessionist movements are spreading throughout Europe.
In Belgium, tensions between French-speaking Walloons and the Flemish (Dutch) population have been on the rise in recent years and there is a simmering sense among many in Flanders that they should be independent. Belgium would not simply split in half: it is likely that the map of Europe would have to be redrawn, with Wallonia perhaps attaching itself (de jure or de facto) to Paris and other splinters attaching to Luxembourg. In any event, Belgium as a country would be done and none of these tiny countries would make a major contribution to NATO or European unity.
More likely is Catalan independence, the effort to break up the country of Spain. Spain’s Catalans feel that they carry a disproportionate economic load as their wealth is redistributed around the country. They have an independent history, language, and spirit, and a Catalan “revolt” could re-inspire the vision of a separate Basque state, resulting in the demise of Spain as we know it today.
To the surprise of many, the old Republic of Venice seems to have resurrected itself in 2014. Earlier this year, 89 percent of voters in Venice approved a ballot calling for Venetian independence. Of course, it is unclear what will happen in the future, but united Italy is less than a century and a half old and thus one can imagine parts of it—like Venice—going their own way.
http://www.theblaze.com/contributions/natos-biggest-threat-is-internal-s...
These cracks in the EU edifice are the beginnings of real trouble. Even larger cracks are emerging in the relationship between Germany and the ECB:
According to German officials, Merkel felt betrayed by Draghi's speech at a central banking conference in Jackson Hole, Wyoming in August in which he pressed Berlin for looser fiscal policy to stimulate the economy.
Her entourage is also deeply sceptical about Draghi's plan to buy up asset-backed securities (ABS) and covered bonds in the hope of encouraging commercial banks to lend.
Most of all, politicians in Berlin worry that if this scheme doesn't work, the ECB president will be tempted to launch full-blown government bond buying, or quantitative easing. This is a taboo in Germany and a step Merkel's allies fear would play into the hands of the country's new anti-euro party, the Alternative for Germany (AfD).
Losing the support of the euro zone's biggest and most influential member state would be fatal for the ECB's credibility, eroding confidence in its ability to work with governments to get the euro zone economy growing again.
http://mobile.reuters.com/article/idUSL6N0SI3D520141023?irpc=932
Note that the primary concern for German officials is not that the ECB has no clue what it’s doing… but that if QE fails it will provide fodder fro Merkel’s primary competitor in the Germany elections…
Again, politics drives everything in Europe.
How this will all end up is obvious to anyone: the EU Crisis will return and the whole mess will come crashing down.
Prepare now, the next round of the crisis beckons.
If you’ve yet to take action to prepare for the second round of the financial crisis, we offer a FREE investment report Financial Crisis "Round Two" Survival Guide that outlines easy, simple to follow strategies you can use to not only protect your portfolio from a market downturn, but actually produce profits.
You can pick up a FREE copy at:
http://www.phoenixcapitalmarketing.com/roundtwo.html
Best Regards
Phoenix Capital Research
- advertisements -
The EU is a roach motel, once you enter you can never leave- like club herpes, look what they're doing to Ukraine just to get them in, literally declaring the political opposition "terrorists" and exterminating them like cockroaches, and for what? The EU non-state? Till when, Muslim plurality? That's a date that keeps moving forward.
The EU is future Caliphate, demographics says so, its been forced before, but they didn't have the tools then that they have now.
This time it will work and if it doesn't they'll make a killing in the interim and the fail.
The real issue here is sovereignty. Many of the peoples of the EU are just plain tired of bureaucrats in Bruxelles telling them what to do; the fact on the ground is that globalization and the EU central bank dictate over all. The Europeans know a dictatorship when they're under one.
I lived in Europe for many years & travelled full time EVERYWHERE, know it very well. Europe is MAGNIFICENTLY enjoyable for cycling on extensive paved & solid gravel paths, superb drinking & eating, but in terms of government, politics, entrepreneurism, free-enterprise, work-ethic, rights-to-your-own-earnings, etc it is a ROTTED OUT socialist parasite carcass, the epitome of coercive collectivism.
Europe is delightful to visit & play, but I would not want to try to earn an income there and keep a significant part of it !
vielen Dank lieber Herr.
I have tried many times to explain to friends and colleagues why Europe is so wonderful, and so hopeless. I don't think I ever did it that well.
This seems irrelevant, but it isn't. I once heard a young black man, on welfare, facing two felonies and two baby mommas wanting support, describe his life this way, " I can't win, and I can't lose."
That's what Europe does to men. It takes away all promise, all fear of failure, all incentives, and all hope.
But the chicks...;)
When I first moved to Europe I had the freedom to live anywhere because I was working in all countries, so I explored them all. Food & drink and women, were awesome & powerfully addictive everywhere, but Germany was the clear winner for me taking into consideration all factors, including practical things like weather, infrastructure, high-tech goods & services, etc. Over the years I fell deeply in love with Germany, especially the yet-traditional villages & small towns in the mountainous areas (eg bavaria), but big cities like Munich are also awesome. I was ready to go all-in and expand my investment in Germany to include a big property & home, but I could see the EU crash coming, so I sold out of all my holdings in Germany when the exchange rate was a looooong-gone $1.50USD to the Euro.
Why ?
Because I could see clearly that Germany itself was in socialist free-fall AND that prosperous Germany was going to get stuck paying the debts of all the corrupt hyper-socialist dieing countries, eg Greece, Spain, Italy, etc.
If Germany leaves the EU, stands on it's own, and reverses the fatal slide into socialism, I would move there immediately.
europe may be a disgusting mess but I have my mother in law living in my house. can it get any worse?
Yes it could get worse, eg your mother-in-law could bring a bar-bum to live with her/you, and she could get pregnant too. Lots more stinky shit could befall you. Most important/dangerous thing a man ever could do is choosing who he legally binds himself to, rarely works out well enough to be worth all the sacrifice, suffering, & costs.
can it get worse?
On a long enough time line, they become their mommas.
I'm considering the South Pacific. Maybe we should compare notes.
You speak the truth, I have been writing for some time about the problems in the Euro-zone. The biggest news for a long time has been what is not happening. The Euro-zone is engaged in a talkathon, they have talked, and talked, and talked. The following article from last spring delves into several of the issues they face.
http://brucewilds.blogspot.com/2014/04/euro-zone-update.html
Currently the euro-zone is in a far bigger mess than recent headlines and figures suggest. Most of the growth in the Euro-zone over recent years has been in Germany and that bright spot is now under pressure. Italy has been in recession for two years; France’s economy has been stagnant for months. Now that Germany is in trouble, many economist think the chances of a Japan-style deflationary spiral have risen sharply.
What it all boils down to is Germany can’t keep buying Greek bonds and other bad debt with German taxpayer money until the end of time. The article below looks at the corner Central banks have painted economies into by attempting to paper over reality and how these polices will hinders growth for as long as the eye can see.
http://brucewilds.blogspot.com/2014/10/global-economic-malaise-due-to-debt.html
Thank you Pheonix, for telling us yet again that the end of the world is nigh.
Since when does the end of the EU mean the end of the world? The EU was only created 20 years ago. Europe and the world functioned just fine without another layor of tax dodging bureacratic overlords.
I agree it will not be the end of the world but the issue of contagion will be big.
As a European citizen, i can guarantee you every effort is put into the undermining of culture in favor of crony capitalism. It will not succeed, because peak growth will put the guillotines into their legitimate position.
The Gini-gradients between and inside states fuel the politcs .
See
https://www.academia.edu/8816411/Rogue_Swan_EU_disintegration
Germany has a trade surplus of 300 billion plus a year. They can walk away at any time in my view. There are security implications of course...but I don't see any immediate neighbor threatening Germany anytime soon. With the USA all in in Ukraine even Russia looks pretty pathetic right now.
"Not all socialism is created equal."
Who will be buying their cars and machinery when the rest of Europe collapses?
Hi Phoenix Capital. I am greatly afraid that you're wrong. I would love to see the disintegration of the EU (the great homogenizer of national identities and all that is interesting and exciting about the old European cultures"). But you underestimate the determination of the unelected legions of civil "servants" (read "scroungers") to hang on to their inflated salaries and pensions. They will not let go of those, however hard the rest of us poor serfs try to dislodge them, They have the power, and they will not let go! And there is no group of the rest of us that is strong enough or coordinated enough to wrest it from them.
You have a point but just how many moles can they whack at one time?
I'm afraid you're right. But then, look at the USSR's collapse.....
Astute, murdomcsponge, and true. We can see the same dynamic with US Progressives: Both the EU and the USA elite will literally do anything to retain power.
it is not the civil servants who want to keep the EU together, but the corporations and plutocrats who want to keep the EU together.
You don't realize this truth because you do not understand how the elite use the
divide et impera tactic to cripple democracy and therefore obtain more control of the european nations.
Divide et impera divides by combining.
When you combine people together from smaller voting districts into a larger voting districts, you are combining factions.
The more factionalized a voting district, the more divided. The more divided the people, the less unified they are.
The less unified they are, the less able they are to elect and hold accountable politicians.
When the populace is more divided, the expressed common interest is more diffused.
When the expressed common interest is more diffused, the politicians cannot be held accountable as they would if that voting district were more homogeneous and therefore more united.
THis is the divide et impera principle that was the basis for the formation of the USA and is embodied in the structure of the federal government created by the federal american constitution.
This is how pseudo-democracies are created. This is how corporations rule.
The elite are simply doing to western europe today what they did to the several states in north america over 200 years ago--crippling democracy by creating enlarged voting district. Such enlarged districts are more heterogeneous and therefore less unified, thus allowing the rich and powerful and the corporations more control over the government.
To paraphrase and summarize the writings of james madison, father of the constitution, such a governmental structure will prevent the "faction of the majority" from discovering their common interest and uniting against the rich, and so thus a structure will preserve wealth inequality and "protect the minority of the opulent against the majority." (See Madison's fed paper 10, his notes on the constitutional convention and his 'divide et impera' letter to jefferson; also see Dr Woody Holton's book Unruly Americans and Dr. Fresia's book Toward an American Revolution.)
Sorry, Mata Hairy, but you haven't even begun to prove your thesis that corporations are the primary driving force behind and towards larger political entities. If your thesis were true, then corporations would control the UN.
Why would they need to control the UN when they control the IMF and central banks? What we have is world-wide facism with multinational corporations in bed with corrupt mafia governments. They work hand in hand to destroy cultures and loot nations.
Your comment is not germane to my post, where I posited the counterexample of the UN as the largest political entity not created or controlled by corporations, which was Mata's thesis.
No one knows when or how. We do know there are many powerful forces that want central bank control, so I expect it will not happen for many years. There is no alternative but an economic collapse and dark ages again. So buy the ath and enjoy life. Stop worrying about something which you have no control.
Ain't gonna happen. You've got it all wrong on every point.
I couldn't do without Phoenix Capital "Research"' smorgasboard on Europe. Deeply researched, stunning, powerful insights such as "the whole mess will come crashng down".
USSA will dissolve before Europe.
Not a chance. EU is only 20 years old and nothing is holding it together but a bunch of elitist bureaucrats. They've been at each others throats for 1,000 years before that. EU is made up of dozens of different cultures and languages. USA has a common language and history for now. The powers that be are working hard to change that with mass immigration. The USA will eventually dissolve when the economy implodes, but that will be after the EU.
Deutschmarks!
Never a good idea to remove politicians from the reach of their constituents or let money-changers run things.
The only question is : to which century will the European continent revert.
To reply to that question we have to understand what other bigger players will become in the coming decades; aka USA, China, Russia and all the others now suffering from similar attrition pains or conversely from growth excroissance uncontrolled momentum; of which population stays a huge conundrum.
All these nations live on the same planet, with a constant energy flux plateau of fossils, and an increasing spike going viral of climate deregulation, dystopian trend which will make the financialized deregulation of Reaganomics look like childs play in its awesome fall out.
Our current paradigm is thus kaput and Europe is just cog in that giant wheel of inevitable change.
Tipping times and the Medusa Raft. I hope there is a silver lining somewhere as I stay an optimisit inspite of our scenario of black swan flying in droves.
Maybe Rifkin has the answer.
Anyways, European reset is not the biggest issue on planet Earth.
Europeans are survivors and have History on their side.
Unless you be an Oligarch, in which case it could start the herd of financial dinosaurs running off the cliff in $-fiat decay stampede.
And that is bad news for those who have made this current funny money world and its power concoction.
Exactly to the point. And looking at the US, it will be the fourtheend century, new for the US, re for Europe.
The EU will eventually spin apart from its current organization. While socialism is predominant in most nations, the southern European nations have the most anti-business, socialist model that will shorten the life of the current EU model. But separating from the EU won't solve their problems either. There problems are more about decades of labor laws designed to protect employees while also disregarding the health and life of business that provides those jobs. I'm confident if the EU will have any chance of survival, each member will give up their sovereingty to create labor laws and adopt a new model that's business friendly. Frankly, I'd rather they remain individual countries and reverse their anti-business policies and huge social safety nets.