Step-By-Step: How To Fix Europe
via Mark Grant , author of Out of the Box,
It’s these changes in latitudes, changes in attitudes
Nothing remains quite the same
With all of our running and all of our cunning
If we couldn’t laugh we would all go insane
-Jimmy Buffet, Changes in Attitudes, Changes in Latitudes
As we prepare to push off from Green Turtle Cay tomorrow morning and “Wishes Granted” heads back to Fort Lauderdale I look over the ocean and wonder what has changed since I began my journey. There is nothing quite like “messing around on boats” or those moments in the early morning before the sun tips over the horizon to consider the financial seas. After almost four decades of messing about on Wall Street I visualize the times and tides from a long perspective of having ridden the waves of both calm and storm. With record low Treasury yields it is clear that the bond markets think we are about to embark upon a difficult journey while the equity markets are still regaling in the quarters past and concentrated on the technicals of the rigging. The bond markets have read the charts and looked at the weather ahead more correctly I fear and the length of our European journey changes nothing about the difficulty of the upcoming passage.
I have been asked so many times and by so many people over the last couple of years how to fix Europe that the question is now commonplace in my thinking. Generally I am not given the time in the media to answer the question fully as they want you to explain the silver bullet in a five minute sound bite. Neither my Kansas City brain nor my Kansas City mouth can move words onto the airwaves with such rapidity. I have now had some time to ponder the concept and consequences of what has been asked and this morning I will give you the short version.
Fixing Europe-Step I
Europe has to stop lying and start telling the truth in the first instance. The data has to be real and accurate and not shaded so that investors can regain some confidence that there is some reality to the numbers presented. Europe has been much too cute in its presentation about almost everything and this needs to stop and they should proclaim a new day of openness and honesty and stop trying to fool everyone and mask the truth which has been the manner in which they have done business.
Fixing Europe-Step II
Europe needs to specifically address the problems of their banks. The banks should be shrunk so that they do not overcome the nations in Europe. The European banks are currently three times the size of the EU-17 and that position is so dangerous and so fraught with peril that it must be changed as a matter of some urgency. All of the banks should also be overseen by one authority and the regulator should be independent, tough and unforgiving in oversight and the regulations must be applicable all across Europe with absolutely no variation. No sovereign central bank should have any authority at all and the ECB should not be the regulator as it is much too political a position in Europe which is a totally different structure than the United States. One European Central Bank for fiscal and economic policy and one European regulator to police the accuracy of the data and the amount of leverage and adequacy of capital and collateral that does not waiver from one nation to the next.
Fixing Europe-Step III
There would have to be one Department of the Treasury. The national Parliaments could present budgets but the one European regulator would have to decide and have the ability to implement. Every nation would have to submit and there could be no going back.
Fixing Europe-Step IV
The people in Brussels would have to be elected by the citizens in Europe. All Parliamentary appointments would have to be stopped. They would need some kind of Congress and Senate solution but the people elected would have to be direct from the people so that all citizens had representation.
Fixing Europe-Step V
The judicial system would have to be European. From the appellate courts up everything would have to go to the European courts and all of the national judiciaries would have to be reorganized.
Fixing Europe-Step VI
Europe would have to become a country. There could be no more sovereignty for all kinds of issues and political constructs. It would have to be the country of Europe and the nations would have to become like States in America. “One nation under God and indivisible.”
The Costs of Fixing Europe
The main issues bended about in a number of significant ways would be the total and uncompromising loss of all of the nations’ sovereign status. There would be virtually no more Spain, France, Italy et al. Every nation and their cost of funding and their standard of living would have to merge at some average or mean.
So I ask Europe; are you prepared for this? Do you want this? Are you willing to pay the price for this because if you are not then I suggest you end the charade and protect your own interests before you fall down the rabbit hole that you have created by your own political and economic deceit!