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Observations on the European Farce ^ | June 16, 2012 | Daniel J. Mitchell

Posted on 06/16/2012 4:59:20 AM PDT by Kaslin

Spain’s received a bailout, Greece is having another election tomorrow, and the European political elite is pushing for more centralization.

In other words, business as usual in the continent where voters think you can get nothing for nothing (this satirical cartoon is now European reality) and politicians think every problem can be solved by more borrowing.

Regarding the Spanish bailout, here’s an amusing video of Nigel Farage, head of the United Kingdom Independence Party, commenting on this latest European “success."

The Genius of Mutual Indebtedness - Nigel Farage

Farage is an entertaining speaker, as you can see in other videos here and here. Indeed, the Brits serving in Brussels all seem to have a way with words, as you can see from these videos of Dan Hannan and Godfrey Bloom.

While England’s euro-skeptics make good points, what matters most is whether Germany agrees to endless subsidies for its profligate neighbors. There are signs that patience is wearing thin, as seen by these excerpts from a Frankfurt-based Bloomberg columnist.

Germany is feeling more and more like the rich uncle in a poor family. Its spendthrift relatives in the euro area are lining up to shake down their wealthier kin for loans that they may never be able to repay. Actually it’s worse than that: Those poor relatives seem to have forgotten that their uncle has already given them a lot of money. …Hans-Werner Sinn, a government adviser, …noted in a New York Times op-ed that Greece has already received the equivalent of 29 Marshall Plans from Germany… But how can a case be made for even more support when Germany’s biggest neighbor wants to put his feet up at the age of 60 — as French President Francois Hollande is planning by reversing the increase in retirement age – while Germans are expected to keep working until 67 before they get their (steadily declining) state pensions? Let’s not even talk about Greek pensions, which until recently had been paid to many dead people.

But the centralizers in Europe seem oblivious to these concerns. The clowns in the European Parliament think it would be great to have a fiscal union, which is basically a means of having German taxpayers subsidize Italian moochers.

The European Parliament on Wednesday (13 June) approved draft laws that would strongly increase Brussels’ power over eurozone countries’ budgets. …”This is the core of a fiscal union,” said Austrian MEP and socialist leader Hannes Swoboda. …They want a European Debt Redemption Fund that would bring together the debt of eurozone countries that is greater than 60 percent of GDP, allowing it to be repaid in the long term at lower interest rates. The draft would bind the commission to proposing a “roadmap” for establishing eurobonds (the mutualising of eurozone debt) once the legislation comes into place.

Not to be outdone, the buffoons in the European Commission want political union as well, which also is a mechanism for letting Spanish looters pilfer the German taxpayers.

European Commission President Jose Manuel Barroso has said member states must agree to a big common budget, a future banking union and – ultimately – political union in order to save the EU. …Barroso’s final step – fiscal and political union – would see EU countries issue joint bonds, co-ordinate tax policy and co-ordinate national spending on everything from healthcare to schools and social welfare. …Belgian liberal Guy Verhofstadt said the summit paper should be a legal proposal for creating a “federal union” and that commission budget plans should call for “own resources” – direct taxation of EU citizens by Brussels.

It’s not terribly surprising that the deadbeats of Europe want access to the money of German taxpayers, but it is rather shocking that German politicians are willing to play this no-win game. Indeed, Frau Merkel actually is an advocate of political union. Sort of like a sheep voluntarily joining two wolves in a debate over what to have for lunch.

And keep in mind that “co-ordinate tax policy” is nothing more than a deceptive way of saying tax harmonization, which would mean an end to tax competition, thus achieving a long-held goal of Europe’s political elite.

In other words, the mess in Europe is a steroid-fueled example of Mitchell’s Law, as each government-caused screw-up is used as an excuse for the next government-caused blunder.

TOPICS: Business/Economy; Editorial; Foreign Affairs

1 posted on 06/16/2012 4:59:24 AM PDT by Kaslin
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To: Kaslin

The Romans found out that the Greeks made excellent slaves!

2 posted on 06/16/2012 5:04:14 AM PDT by Dr. Ursus
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To: Kaslin

When you get down to it...there’s two waves in action. First, the Greek wave where an entire country was dishonest about revenue and spending, for several decades. Things finally caught up, and they are between a rock and a hard place. No matter how the vote goes on Sunday...Greeks are going to take three or four steps down in life, and the next decade will be a harsh situation for those on minimum income.

The second wave is the rest of Europe riding out a bank crisis which is very similar in nature to the 1929 banking crisis of the US. You could walk into a Spanish bank within the next couple of banks and have a minimum of amount of cash that they’d allow you to withdraw. You want a loan for a new house? Forget about it. You want a loan for a car? You better have half the cash up front and work closely with the dealer.

At the end of this a strangely stronger dollar (without any true evidence), which harms US imports into Europe for the next couple of years. The US in this case...can only lose.

3 posted on 06/16/2012 5:09:17 AM PDT by pepsionice
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To: Kaslin

Watch the ECB and our Fed conspire to keep the Euro afloat until after our elections. Once the elections are over and Obama is reelected it will all come crashing down. Meanwhile the strategy is to buy time.

4 posted on 06/16/2012 5:14:35 AM PDT by Old Retired Army Guy
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To: Kaslin

Freepers should absolutely listen to Nigel Farage’s harangues concerning the EU to get a good idea of how to do rants. He is, like many Brits, superb at ranting. He does it so well he could be arguing for arsenic in your Wheaties, and you’d end up agreeing with him. A strong argument for the received pronunciation.

5 posted on 06/16/2012 5:49:46 AM PDT by driftless2
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To: Kaslin

MAED.............mutually assured economic destruction, all aboard!!!!

6 posted on 06/16/2012 5:50:50 AM PDT by ronnie raygun (B B)
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To: Kaslin
"...voters think you can get [something] for nothing"
"...politicians think every problem can be solved by more borrowing."

They just want to be like U.S.

7 posted on 06/16/2012 6:32:07 AM PDT by Iron Munro (John Adams: 'Two ways to enslave a country. One is by the sword, the other is by debt')
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To: Dr. Ursus

After WWII, the kings and princes, and their tranditional families opted for Socialism for the masses. In every country in Europe the former Kings families has literally legistated a stipend for their maintenance and support. It is usually a Million-plus Euro’s per family member in CA$H along with maintenance of their residences.... The SURFs are still outside the castle gates living in their collective squallor. This is what makes Americans different. Even a sleeze ball like obama can rise from the masses with a book deal (read: wealth transfer) and live among the stars.

8 posted on 06/16/2012 6:54:44 AM PDT by Jumper
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To: Kaslin

I don’t understand why Germany wants political union. Don’t they realize that they will be outvoted by the rest of the eurozone members, including the gnomes in Brussels, who will then all loot the German treasury?

9 posted on 06/16/2012 7:30:28 AM PDT by expat2
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To: pepsionice

I’m going to France in October. For those with crystal balls, will the dollar be worth more or less there by then?

Just askin’


10 posted on 06/16/2012 7:35:35 AM PDT by Peter W. Kessler (Dirt is for racing... asphalt is for getting there.)
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To: Peter W. Kessler

The Euro has fallen to $1.24 but recently began rising again, not quite $1.26. It really depends upon future events that remain unsettled. The Greek vote tomorrow, contagion in Spain, Portugal, Ireland etc., German willingness to bail out failed Euro member states, and last but not least, who appears poised to win in our own election.

I’d say it’s a safe bet that the Euro is going to stagger around as far as exchange rates and could fall some amount, not a bad thing for exporting economies within the EU or those dependent upon foreign tourism. But, it won’t fall as far as some external to the EU might hope.

If it goes lower than $1.20 it’ll be more due to dollar strength from flight to safety than anything else, and fairly shortlived. There is a de facto peg of the Euro to the Swiss Franc that is to some extent behind this.

There is a lot of distortion and instability, however, so it’s a difficult thing to try to determine. Anyone claiming to have a clear crystal ball right now is either lying, trying to sell you something or both. I can’t overstate how precarious things actually are.

11 posted on 06/16/2012 7:56:05 AM PDT by RegulatorCountry
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To: RegulatorCountry


If I have to skip a meal to put gas / diesel in the rental car, so be it.

But I’m going just the same.

12 posted on 06/16/2012 9:10:11 AM PDT by Peter W. Kessler (Dirt is for racing... asphalt is for getting there.)
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To: expat2
The Germans know what they are doing. What is not spoken here is what they will demand from the rest of euroland in exchange for their support of these schemes.

As usual Germany has emerged as the strongest economy in Europe, and they are not about to sacrifice that for the greeks and italians and other riff-raff.

13 posted on 06/16/2012 11:43:54 AM PDT by hinckley buzzard
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To: hinckley buzzard
Yes, but either they have veto power (which the others aren't going to give them) or they will be outvoted -- or maybe the Froggie bureaucrats in Brussels will take over. In any event, it will end badly.

They might be better off leaving the eurozone themselves and letting the losers devalue their euros to survive. The German banks won't like that much, though.

14 posted on 06/16/2012 12:23:14 PM PDT by expat2
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