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
The US meltdown – thanks in large part to government and regulatory corruption and the artificial stimulation of land prices – is mild compared to what is befalling Europe. Europe, that supposedly superior continent of socialist sensibility, compassion, and intelligence. Europe is bankrupt and facing economic collapse.
Yes that esteemed Europe, which has not produced anything of note since its great socialist experiment began post World War II. Yes Europe, the good little statist organisation which is now going through a Depression. The cultured, sophisticated Europe, which the Prophet Obamed so desperately wants the US to imitate. Yes Europe, that failed collection of socialist nations, dedicated to the communal, and resentful of the individual. One beneficial outcome of the European depression might be to eradicate the banality of socialism.
How bad is it in Europe – that nirvana of baguette eaters; hot Italian clothing; and 'sophisticated' thinking ? Europe is most likely bankrupt – literally. This is not a surprise to anyone who has bothered to study, think about or dissect the inevitabilities of statism. Bankrutpcy or war, are the two main outcomes. But the price paid will affect every Euro citizen and it will be steep. Consider the following:
-European GDP has most likely contracted 6-10% in the past year
-Structural unemployment, if one strips out the government lies, work-fare programs or those sitting at home with 'back' problems is 20%
-Many Eastern European states such as Latvia to the Ukraine are going to default and go bankrupt
-There is no central bank reserve and not enough IMF funds to bailout Eastern Europe, nor properly support the fast collapsing European banks
Europe's banks will need to write off somewhere between $ 5 Trillion and $14 Trillion – which would be 100% of Europe's GDP. The American banks by contrast probably need to write off between $ 1 Trillion and $3 Trillion. This is catastrophic enough. But at least the US has a Fed Reserve and can issue debt to restructure its banking system. There is no way that Europe can fund a $5 Trillion or more bailout of the banking system.
As Europe's banks collapse the Euro will likewise decline. Real wages will drop as interest rates rise, fueled by inflation. Europe will now be caught in the economic nightmare of contracting GDP growth; far lower incomes and tax revenues; and high inflation. This will be aggravated by a dramatic future debt defaults of most East European states, to total about $2 Trillion, and economic collapse is not only possible, but probable. Add to this problem set, the welfare liabilities which total 150% or so of EU GDP, and a complete economic meltdown in Europe would be a reasonable forecast. Europe is bankrupt.
So much for the superiority of state socialism.
As John Maudlin investor and adviser, and one who predicted the current crisis wrote in a recent newsletter: [see http://www.businessinsider.com/]
“The problem is that in Europe there are many banks that are simply too big to save. The size of the banks in terms of the GDP of the country in which they are domiciled is all out of proportion. For my American readers, it would be as if the bank bailout package were in excess of $14 trillion (give or take a few trillion). In essence, there are small countries which have very large banks (relatively speaking) that have gone outside their own borders to make loans and have done so at levels of leverage which are far in excess of the most leveraged US banks. The ability of the "host" countries to nationalize their banks is simply not there. They are going to have to have help from larger countries. But as we will see below, that help is problematical.”
The European Union was always a bit of a myth. There is no European demos. Milan has little in common, outside the abstract of a shared cultural heritage with Malmo, Madrid, Mannheim or Manchester. Economic cycles vary by region. The EU was always a political project one designed to make Europe in the aggregate relevant on the world stage. The problem is that its top down, socialist, statist composition ineluctably leads to ruin. Communal ideologies are failures. That simple fact is not a surprise to anyone who views Europe's current depression.
Perhaps a beneficial outcome of Europe's economic demise will be a rethink on why socialism and statism do not work. Then again there is probably more of a chance that Prophet and President Obamed, will convert to conservatism.
