Monday, November 14, 2011

More on Europe

If you think replacing the leaders of Italy and Greece over the weekend gives an "all clear" to the European community, German Chancellor Merkel would suggest otherwise.

Here's an excerpt from a Reuters news piece desribing Merkel's speech this morning in Leipzig:

"Europe is in one of its toughest, perhaps the toughest hour since World War Two," Merkel told her conservative party in Leipzig, saying she feared Europe would fail if the euro failed and vowing to do anything to stop this from happening.

But in a one-hour address to the Christian Democrats (CDU), Merkel offered no new ideas for resolving the crisis that has forced bailouts of Greece, Ireland and Portugal, and has raised fears about the survival of the 17-state currency zone.

"If the euro fails then Europe fails, and we want to prevent and we will prevent this, this is what we are working for, because it is such a huge historical project," Merkel said in the east German city of Leipzig.

Then there's the human costs of the euro crisis. Across Europe, ordinary citizens are seeing their standard of living shrink dramatically as governments struggle to comply with the demands of European leaders lead by the French and German governments.

Here, for example, is an excerpt from last Friday's Financial Times. In a small article titled "Sign this and accept a 25% salary cut", the FT described how highly educated members of the upper middle class in Greece are being forced to take huge pay cuts or else lose their jobs:

...White collar workers such as Constantinos Makris, a stockbroker in Athens, are also feeling the sting. Managers "gave me a call one morning and said 'Would you come downstairs?'...Then they said 'Sign this paper and accept a 25 per cent reduction in your salary'. After threatening to quit, Mr. Makris eventually settled for a smaller cut.

The problem is not just belt-tightening; it's a sense that the good times might gone for a generation, thanks to debt obligations incurred by governments who understood that the path to power was to never tell voters "no".

In post-World War II Europe, austerity ruled for years. Rolling Stone guitarist Keith Richard, for example, describes in his autobiography Life that he never tasted sugar for the first nine years of his life after being born in 1946 due to post-war shortages. Everyone understood why basic necessities were rationed, which seemed to make it more bearable.

Today, according to this morning's New York Times, citizens are facing the hard times with more bitterness than a couple of generations before:

In the lands of southern Europe, used to getting by with wile and guile, the prospect of hardship seems all the more bitter, illuminating, as it does, what outsiders cast as an all-too-predictable national failure to live up to the membership rules of the euro club that were devised and watched over by hard-nosed Germany in particular.

Modern austerity could never be described as an ethic; for southern European nations squirming under pressure from the Continent’s wealthier northern lands, it is an affront to come to grips with the legacies of economic ill-discipline. And in the north, it is a high price to pay to rescue the profligate south.

Austerity is a time bomb ticking ever louder.