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Letters by a modern St. Ferdinand III about cults

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Plenty of cults exist - every cult has its 'religious dogma', its idols, its 'prophets', its 'science', its 'proof' and its intolerant liturgy of demands.  Cults everywhere:  Corona, 'The Science' or Scientism, Islam, the State, the cult of Gender Fascism, Marxism, Darwin and Evolution, Globaloneywarming, Changing Climate, Abortion...

Tempus Fugit Memento Mori - Time Flies Remember Death 

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Wednesday, May 9, 2012

The Euro's ultimate failure.

Germany cannot pay for its hegemony.

by StFerdIII

In America vs. Europe, the potentially destructive nature of the Euro-zone was summarized:

With declining productivity, government control of the economy has increased during the past 10 years. The average share of government tax revenues as a % of GDP is just over 50% throughout the EU. This does not include regulatory costs...Fiscal imprudence, rising government control, labour and market rigidity and manipulation of treaty obligations are serious issues that point out the need for liberalization within the EU.” [p. 174-5]

Since this was written things have gotten a lot worse. The EU and its subset, the Euro-17 nation currency union, has been without question, a signal failure. Why is this so? Let's look at the Euro and list 3 obvious reasons why it has failed:

  1. The Euro was in part the attempt by Germany to guarantee her exports under an Euro-DM currency. Since the inception of the Euro German exports have risen by 80% in 10 years. It has not stimulated, however, economic development in the other Euro states.

  1. The Euro raised prices across Europe through artificially over-stating a fixed rate between national currencies and the DM [or Euro]. This has raised wages, production and consumer costs across the Euro 17, depressing competitiveness, innovation and business activity. Unit Labour costs in Europe 2000-2012

  2. The Euro was not only a political project, but also a means to hide national debts behind a DM backed supra-national currency. Governments ignored the Maastricht criteria on deficits and debt to GDP. They have merrily spent as much as they wished to buy votes and socially engineer their Euro paradises believing that the DM [read Euro] financier [namely Germany], would bail them out.

The Euro inflicted the worst of fiscal and monetary moral hazard on European citizens and businesses. It has allowed governments to lie about deficits and debts, and not even mention off the balance sheet liabilities which total some $100 Trillion. It did nothing to force reforms in the distorted and corrupted practices of government, big labour groups and unions whose power blocks capital and job formation. The nexus of big governments, unions and corporations is alive and well and even flourishing as never before. No reforms in labour practices or in capital markets have been seen since the advent of the Euro. No structural changes have occurred in the past 10 years.

The Euro simply entrenched and deepened the European fetish for socialism and state power. It will lead to bankruptcy and the dissolution of an unnatural currency area, in which disparate nation states do not share common monetary, fiscal, trade, labour or capital cycles and flows. In following the Euro 'crisis' the media will of course focus on 'left' vs 'right', and 'austerity' [of which there is very little] versus 'stability'. 'Radical' reforms will be juxtaposed against 'moderate', 'balanced' plans to address Europe's debt bomb. Odes to Europe needing 'bazookas', 'more firepower' and 'overwhelming force' to deal with its inevitable fiscal implosion will tantalize these mainstream media 'experts'.

Of course these mavens of analysis will completely miss reality and the relevancy of facts. The Euro is unnatural; it has created massive moral hazard; it defies economic logic; it is ultimately un-democratic; and it will certainly fail. The Euro dream of supplanting the US$ and becoming the world's reserve currency, and giving European 'soft power', hard economic leverage is a shambles and will be shelved within 5 years.

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