If you follow the Sunday political shows, you saw the most dire doom and gloom this week regarding the European financial crisis – it came from all sides of the expert spectrum, literally left, right and center.
Monday, Sep. 26, 2011
Repeating mistakes of the 1930s?
By Robert J. Samuelson - Washington Post
Euro Zone Death Trip
By Paul Krugman - NYT
September 25, 2011
Europe may face a financial meltdown worse than ours as countries default and then banks fail. European leaders recognize the threat but refuse to buck the popular political resistance to properly scaled bailouts – Greece has to be allowed to fail, it cannot be saved anymore. Europe is doing the wrong thing and telling not just us but everyone including the BRICs to take a hike regarding joint pressure for proper action before it’s too late.
George Will, along with many economists, says that the Euro experiment begun in 1999 was set up for failure with no central banking authority and no enforceable rules or regulation. At this point, nobody knows what the debt situation actually is except that it is certainly worse than countries admit. Experts tell us that individual currencies by country would solve the problem; that the failure of the Euro would be a disaster; that saving the Euro now is possible but unlikely; that the longer leaders wait to decide, the worse the consequences. What are ordinary mortals supposed to make of that?
Everyone asks the experts what all this will mean to Americans. The answer is always one or another version of: “I don’t know but it won’t be good.”
In my view, we Americans should learn at least three things from Europe's troubles:
1. Profligate government spending leads to dependency and an insatiable appetite for more.
Greece is broke and after two years of “austerity” programs, not one government employee has been fired. The Greek population demands that the government simply refuse to pay its debts with no understanding that the government would still have no money to provide the services to which Greeks have become accustomed.
2. National debt seriously impairs the ability of government to act in emergencies. There should be deficit spending in bad times but not in good times. [Do we still teach school kids about the ant and the grasshopper?]
All of Europe is basically maxed out on debt – the healthiest economy in Europe owes 83% of GDP. They cannot borrow enough money to bailout a half dozen nations who cannot even balance their budgets let alone pay off debt. The rainy days are here but we forgot to do the saving part; well OK, we’ll borrow; oops we’ve already done that. Lefties tell us government debt doesn’t matter but it does.
3. Leadership is everything.
Populism, government by referendum, direct democracy, doing away with the Electoral College and replacing the three branches of American government with a parliamentary system are all paths to decline. We need leaders who tell us the simple truth and do the right thing. Leaders/legislators must represent our interests, not our whims or appetites and certainly not some political party or popular cult.
And we expect our leaders to represent all of us. Do all of your friends, family and neighbors agree with you about everything? Of course not. Do you expect your legislators to represent all of those folks or just you? Do you really want to use government to force those around you to do things your way? Should we tolerate government doing that even when we agree with the action?
America has “wave” elections from time to time; that’s where the incumbent party legislators are voted out of office regardless of merit. It happens when large numbers of voters are angry. No one can remember a wave election where all incumbents were targeted. This would be a very good time to set a new precedent.
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