The new European Union credit downgrades
The Fitch Ratings agency has downgraded the credit of another six European countries — Belgium, Cyprus, Italy, Ireland, Slovenia, and Spain – citing “the financing risks faced by Eurozone sovereign governments in the absence of a credible financial firewall against contagion.” In other words, these self-styled fiscal medics plunged head-first into deadly disease without making sure they had all their shots.
Still, Klaus Schwab, the World Economic Forum Chairman, opened this week’s annual gathering of the world’s economic and political elite by proposing the following wisdom at a time when change-purses are circling the drain: “My wish is threefold – that we build by searching for constructive new solutions and models, that we bond by looking for long-term vision, and that we bind by creating the necessary underpinning framework of shared values.”
Presumably, Klaus Schwab is 13 years old and hasn’t had “the talk” yet from mom. I definitely would have swooned at such a romantic line in high school, in the days when I was hitting up mom and dad daily for lunch money and thought I’d marry Johnny Depp. I’ve since sobered up, pay my own bills, and Johnny obviously blew me off — so this kind of talk does nothing for my cynical realist heart. It’s the kind of self-flagellating collectivism that got the world into this mess in the first place. Permit me to propose a new mandate: “Focus on saving yourself first, so you can then help others.”
The “me first” concept hasn’t entirely escaped German Chancellor Merkel and French President Sarkozy, thank goodness. Amid all Merkel’s rhetoric about greater political integration and economic control to “fix” the Eurozone mess, the two countries have still toyed more sensibly with the idea of the highest rated E.U. countries issuing new separate debt bonds at lower interest rates so they can then, in turn, funnel money to the hopeless ones who are taking on debt faster than they can pay off the interest.
Nice to see there’s still some instinct of self-preservation. The unspoken truth is that the Eurozone can’t be saved as a whole. It’s only by individual countries getting their act together and crawling up ashore that they can ever hope to throw a life preserver to others. But even self-preservation is becoming increasingly less feasible as the situation grows direr and there’s increasingly less to preserve.
As Fitch points out, a deepening recession risks leading to a greater public outcry and rejection of austerity reforms. Italy’s post-Berlusconi Prime Minister, Mario Monti, is currently contending with taxi strikes for proposing to give out more licenses in an attempt to increase competition, jobs, and performance in the sector. Monti is seeking to actively de-bureaucratize and open up to free-market competition for gas stations, notaries and pharmacies, taking the power out of the hands of the relatively small few who like to keep business in the family – literally. Just under 1 in 5 notaries are related to someone in the business, according to a Bloomberg report. Seeing as how these unions in their current form were conceived by a fascist dictator named Mussolini whose heyday was about 80 years ago, perhaps the system’s a bit dated. Monti still has to get it through Parliament, many of whom work in these sectors themselves and may not want to vote against their own personal interests within the socialist system.
Monti, and Italy, also benefit from him being a “technocrat” – which is code for a non-politician who was parachuted in to fix things, but isn’t tethered to political power at his umbilical cord. Unfortunately, the rest aren’t like him, as they face re-election.
Socialism and its accompanying economic devastation thrive on complexity and red tape. If something’s so simple that anyone can figure it out, then a socialist is being deprived of an opportunity to make a livelihood out of simplifying or translating socialist nonsense for the layman. A whole system is built up around the complex nonsense, with everyone else getting sucked into the socialist vortex and thrown a few shingles for the sake of giving socialists and their cronies some other people over which to lord and thereby justify their parasitic existence. Before long, economic Stockholm Syndrome takes hold and they apparently panic at the idea of having to make a living outside of parameters defined by Benito Mussolini. That’s the dragon Europe is now stuck having to slay.