Sunday, February 28, 2010

Thrift Blamed

Remember growing up with adages like, "A penny saved is a penny earned" and "Waste not, want not." Apparently that way lies madness in the brave new world.

Over the last fifty years there has been a momentum in Europe for a federalist contintent modeled surprisingly on the assembly of thirteen independent American colonies into a structure like the reviled United States. It started with a European Coal and Steel Community, an organization to build the industries in the decade after the mass destruction of WW II. Then there was the European Common Market, a dropping of customs duties and restrictive tariffs in favor of improved commerce across the continent. That morphed into the European Union which was sort of like a regional United Nations but with less effectiveness than even that bunch of nationalistic misfits.

The crowning achievement was the adoption of the universal currency. Living in Europe you soon realized that you lost money every time you crossed a border. Currency exchange meant you paid more for a format than you could sell it back for and you were always left with a pocket full of effectively unusable money after a trip. A single currency seemed a boon to the populace.

There's no free lunch and no silver lining to a common currency. It is a huge loss of national sovereignty and a drastic reduction of a nation's ability to manage its own economy. When you've got a national monetary standard you are motivated to be cautious with the value of that resource. When your money is buoyed up by the prudent nations you easily slip into bad habits.

That's why Greece is in a state of economic collapse and apparently Portugal and Spain are already on the slide into the same pit.

Don't Change Your Behavior, Get the Others to Be Equally Profligate

The run-away spending and easy credit that fueled the collapse of Greece isn't the problem you see. It's those Germans who value their money, take care of their resources and live within their means. Europe needs Germans to start burning 100 Euro notes for fuel so that they can be in the same boat.

Can we see a similar situation in the US? Haven't we been told repeatedly that we need to distribute "stimulus" money and not use it to pay off our debts or bolster our savings. We need to spend, spend, spend. And then all will be well with the world.


Carter Kaplan said...


Nigel Farage recently launched a barrage of vituperative language in the European Parliament. The abuses he piles on EU President van Rompuy are extraordinary, to say the least:


jjet said...

Scrap the Euro.

Replace it with the tried and true "fafoofnick"!

Ed, would you care to write an essay on how the use of the fafoofnick can revolutionize Eurpean trade?