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At Large
Europe’s Broken Economies
It’s the culture, unfortunately.
During September this year, much of Europe descended into mild chaos. Millions of Spaniards and French went on strike (following, of course, their return from six weeks vacation) against austerity measures introduced by their governments. Across the continent, there are deepening concerns about possible sovereign-debt defaults, stubbornly-high unemployment, Ireland’s renewed banking woes, and the resurgence of right-wing populist parties (often peddling left-wing economic ideas). Indeed, the palpable sense of crisis left many wondering if some European economies have entered a period of chronic decline — one which might eventually reduce Europe to being a bit-player on the world stage.
Obviously we should avoid over-simplification. In Germany and Sweden, for instance, unemployment is declining while economic growth and exports are rising. Not coincidentally, both countries have implemented significant economic reforms over the past ten years. To the audible disappointment of the world’s left-wingers, Sweden is no longer Social Democracy’s poster-child.
Nor can Europe’s present woes be explained in mono-causal terms. Like America, property-bubbles and over-leveraged financial industries played a role in some countries’ meltdowns. But not every European nation presently enduring economic hardship experienced banking crises on the scale experienced by Ireland and Britain.
It will be decades before economists and historians completely diagnose what’s happened to Europe’s economies since 2008. Many, however, will likely conclude that many European countries’ economic culture helped them lurch into seemingly unending crisis.
“Culture” is one of those heavily over-used words. But in sociological and historical terms, “culture” is a way of describing, among other things, the approach to life, the values emphasized, attitudes toward work, the understanding of law, and ultimately the view of science, the arts and religion prevailing in a given society. Over time, these form a type of inheritance that can remain relatively stable in particular historical settings over several generations.
Again, we shouldn’t over-generalize. But we can speak of a West European-style economic culture that differs (at least for the moment) from what might be called “Anglo-American” ways.
Few, for example, would question that the dominant value presently informing Western Europe’s economic cultures is security. Poll after poll illustrates that if West Europeans are asked to choose between more security or more liberty, they overwhelmingly opt for security. That’s understandable, given 20th-century Europe’s history of political and economic instability.
Unfortunately the policies directed toward preventing reoccurrences of 1930s-like mass unemployment and the economic turmoil that fed the extremes of left and right have contributed to notoriously rigid labor markets throughout Europe, not to mention fiscally unsustainable welfare states. These have in turn helped facilitate many European nations’ high unemployment levels, and created deep anxiety among those unable to find full-time work.
Another defining feature of a society’s economic culture is its dominant mode of economic advancement. Broadly speaking, this occurs in two ways in modern economies. The first is through free enterprise and competition within a stable framework of laws, customs, and morality. The second is through closeness to government power.
Much of Europe has opted for the second approach. This manifests itself in what might be called hard or soft corruption. “Hard” corruption can be found, for example, in contemporary Greece — a country where it’s very difficult to get anything done without payoffs to one or more of Greece’s army of civil servants.
In a way, however, “soft” corruption is more insidious, because it avoids the overt unseemliness of accepting bribes. Soft corruption essentially involves cozy relationships between European interest-groups — such as businesses unwilling to compete, or public-sector unions intent on securing permanent employment for their members — and political parties from across the ideological spectrum. The interest-groups provide the cash and votes that help elect politicians. The politicians reciprocate by legislating to protect their supporters.
The fatal flaw of this arrangement is that neither hard nor soft corruption creates wealth. Instead, they shift the incentives away from creating wealth through entrepreneurship and competition. More and more people are thus drawn into playing a dysfunctional game in which the objective is to manipulate state power in order to redistribute wealth towards oneself.
Sooner or later, those genuinely interested in creating wealth in such cultures either give up or simply migrate to more entrepreneurial-friendly settings. Those left playing the redistribution game subsequently find themselves fighting over less and less. Sooner or later, something has to give. Greece has reached that point. Much of Europe is struggling to avoid following it into the abyss.
The irony is that the barriers to change in Europe are not economic. They’re political. And most European politicians understand this all too well. As Luxembourg’s prime minister, Jean-Claude Juncker said in 2007: “We all know what to do, but we don’t know how to get reelected once we have done it.”
Fortunately, no one is a prisoner of their culture, economic or otherwise. European governments could make substantial progress if they chose to accompany austerity measures with pro-growth, pro-entrepreneurship, and anti-crony capitalist policies.
Yes, the price for some might well be electoral defeat. But so be it. If the whole point of politics is to promote the common good rather than one’s self-advancement, then any European political leader with any integrity shouldn’t hesitate to think — and do — the unthinkable.
About the Author
Samuel Gregg is Research Director at the Acton Institute. He has authored several books including On Ordered Liberty, his prize-winning The Commercial Society, Wilhelm Röpke’s Political Economy, and, most recently, Becoming Europe: Economic Decline, Culture, and America’s Future.
Letter to the Editor View all comments (41) | Leave a comment
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Appleby| 10.4.10 @ 7:30AM
Coming soon to the Great White North just above your own country. Come up here and see for yourselves how Ontario is becoming increasingly like the failing European countries of the world.
Eric Cartman| 10.4.10 @ 8:17AM
Dear Appleby,
Thank you for your kind invitation. However, we can save the fossil fuel, lower our carbon footprint, lower the sea levels and not contribute to the destruction of your local endangered flora and fauna by staying here and watching our own country sink into this mess. We appreciate your kind gesture, but feel that if we are to meet the goals set out by Earth loving groups such as 1010.org, we must not use any carbon to view such a redundancy. Thank you for your kind offer and may Gaia bless you with a healthy bounty of fresh, organic vegetables picked only by immigrants of undetermined origin being paid a living wage with health care benefits and having full voter's rights.
Eric Cartman
Harry the Horrible| 10.4.10 @ 9:32AM
Y'all are doin' just fine.
Its us (the USA) that needs austerity measures, along with pro-growth, pro-entrepreneurship, and anti-crony capitalist policies.
If we get back on track, we can drag just about everybody along with us.
tdiinva| 10.4.10 @ 8:12AM
Mr. Gregg:
This statement is inchoherent.
"...the resurgence of right-wing populist parties often peddling left-wing economic ideas..."
What makes something "leftwing" or "rightwing" is its economic [and political] ideas. If a party, like the British National Party, expounds leftwing economic ideas it is a left wing party. I can't believe that you blindly accept the Stalinist definition of left and right. The left can and often is nationalist in tone and it certainly has a powerful impulse toward racism/anti-Semitism at its core. Historically populist movements have sat on the left.
Fascism was recognized as a form of Progressivism until the rise of Hitler and even then Stalin's designation of Fascism as "rightwing" has been misinterpreted across political ideologies. From the beginning Fascism was considered right-deviationist, i.e., the rightward extent of the Progressive movement" and not "rightwing" as in reactionary politics. When market economies collapsed in 1929-33 the Communist theoreticians assumed that the final crisis of Capitalism had arrived and all non-Progressive ideologies were irrelevant. That left a truncated political spectrum of Anarco-syndicalism (left deviationist), the Marxism-Leninism party line (center/truth) and Fascism (right deviationism) as the final political spectrum. When Stalin proclaimed Fascism as the last stage of Capitalism he did not mean that the Capitalist moved right. He meant that they adopted elements of collectivism in an attempt to save itself.
Old Soldier| 10.4.10 @ 10:04AM
"Left" and "Right" have different definitions on the other side of the Atlantic. Over there, the right-wing wants different government programs - not less.
That is the real problem with most of Europe - there are no real conservatives. Even the UK Tories seem to have lost it since Thatcher left the scene.
mark James| 10.4.10 @ 10:36AM
That was tdiinva's point precisely, European political spectrum divides Socialism into left and right halves, this is the concept adopted by American leftists but it is false to the American political spectrum. In the west the REAL left and right are divided by the big government versus small government left and right ideologies. Left extremism in America would equal totalitarian Socialism or Communism whereas right wing extremism in America would equal Anarchy. The left media and academia continue to try very hard to indoctrinate the populace that our only choices are Soft or Hard progressivism when in fact because of the second amendment we could actually chose to start over at a near anarchistic beginning point as we did in the late 1700s.
lucian88| 10.5.10 @ 6:30PM
Perhaps a little anarchy would help. Wouldn't it be better than a long slog escape from totalitarian collectivism??
Romano| 10.4.10 @ 5:05PM
How true. I travel to the UK on business all the time. Thatcher was the last person in the UK premiership who truly understood the "blessings of Liberty"
T1Brit| 10.4.10 @ 2:41PM
Are there any other phrases in such common use that are so utterly meaningless as right and left wing?
There is authoritarian and libertarian, free market and socialist, conservative and radical etc.
These have actual meaning.
Right and left is talk-show babble and should be thrown in the waste bin.
jawin| 10.4.10 @ 5:00PM
Very insightful and and oh so true!
Left and right labels are so very relative, especially to the progressive mind for whom definitions of individuals words can be so volatile. Precision and clarity are what's needed in anydiscussion reagrding politics.
Petronius| 10.4.10 @ 8:33AM
Right on method. Wrong on theory. The "political barrier" to change is the same as it is here; lack of maturity. Our polity and Europe's, not to mention South America's, is dominated by immaturity of a type institutionalized in that German construct known as kindergarten where teacher maintains equality and stability. The reason d' etre' of western governments is to enforce the certainty that nobody among the lower orders gets ahead of anybody else. If I'm wrong, why do governments and their statist cohorts that maintain their power make war on success? The basis of all life on this planet is competition and most people would rather sit in the stands and wait for a ball to be hit to them.
The problem is, life is no game. And while the home run hitters of the major leagues are feted, industrialists are despised because unlike kindergarten they don't have to share their toys with everybody else. That's "not fair."
So long as the primary force dominating society is childish emotion we will keep spinning our wheels
until the axle is grounded. Even then, the mindless boobs will refuse to get out and push. They will cry to government to force others to do it. What they do not understand and never will, is that productive people do not ride with them.
Mark James| 10.4.10 @ 10:42AM
Nice points. But the maturing of the populace is made very difficult because the far left ideology starts by indoctrinating others (youth and race ) that the game is rigged so don't bother to play. Education with truth about who these liars are and exposing their lies is the only long term solution. That means we need to focus on our schools systems with the same fervor we are now applying to taking back the political arena.
lucian88| 10.5.10 @ 6:39PM
It seems to me that no matter how hard governments try to indoctrinate "fair play" in the sense that you describe, the ultimately aggressive energy of nature surges through the cracks in the dam and eventually the whole edifice comes crashing down.
John - TMF| 10.4.10 @ 8:51AM
This statement:
"Unfortunately the policies directed toward preventing reoccurrences of 1930s-like mass unemployment and the economic turmoil that fed the extremes of left and right have contributed to notoriously rigid labor markets throughout Europe, not to mention fiscally unsustainable welfare states."
Is incorrect. There were NO successful or significant "Right Wing" movements spawned, caused, or encouraged by the economic insanity that encompassed the first 50 years of the 20th century.
All of the movements being referred to are Leftist (Progressive) in origin, nature, and operation.
There were no ascendant monarchies, no new kingdoms or Empires with Crowns, courts, and peerages... There were only thuggish Leftist dictatorships promising goodies to the polity with the word, while brutalizing them with fists. All while the the blame for their massive failures were foisted off on phantoms, strawmen, and innocents.
The political violence, and economic mayhem of the last tw0 centuries lays squarely at the feet of "The Left".
Regards,
The Mighty Fahvaag
JP| 10.4.10 @ 8:58AM
The suprise of 2010 is the recovery now underway in Germany, Sweden, France, the UK, and Russia. These nations not only had or are having large GDP bounces, but thier unemployment rates now are below the US. Even Canada is having a decent go of it. In retrospect, this shouldn't surprise us. Many American firms saw the writing on the wall in 2009, and began divesting thier American operations, and moving them to friendlier climes. Many US CEOs may have nothing but great things to say about Obama, Geithner, Pelosi, and federal government. But, one should look at thier deeds and not thier words. There are 2 types of firms in the US that are flourishing; those who benefit from recent federal policies (mainly Wall St), and those with large offshore operations. When one looks at companies like Apple or GE one will see that it is thier overseas operations that are generating thier revenues and profits.
But of course, much of the 2010 turn around is the result of historically high QE and low interest rates. Also, the expectations that the Bush Tax Cuts will expire in toto come 1 Jan has given an incentive for many firms to spend some of thier capital now. For in 2011 things may not be so rosey.
Kurt| 10.4.10 @ 10:18AM
I follow a couple of English websites like Daily Mail and The Telegraph and have noticed that any controversial story that is posted such as mass immigration have the comments section closed. These euro countries are being over ran with third world Muslims and a burgeoning welfare state and any negative comments are branded as NOT politically correct.
I have AOL and have noticed that they are well on the same path and that a leftist filter has to approve comments before they are posted now. The loss of free speech, like in Europe, is well on its way to our shores, and will have disastrous consequences like in Europe! I hope we can start to turn things around in November but I'm not holding my breath on it!
Redstateboy| 10.4.10 @ 10:46AM
It's the same on Comcast.net... No Conservative comments are tolerated so all you've got is a Liberal echo-chamber.
joli| 10.4.10 @ 7:23PM
Kudos to the commentors at TAS, where we manage to remain mostly civil without the need of moderators. As much as I learned from AT in the last several years, their moderators apparently don't know the difference between making a statement from a Christ-centered worldview and "proselytizing". Therefore the only comments that get through, even when the article being commented on is of a religious nature, are the most meaningless Christian platitudes. I gave up on them last summer, and now only visit there when I have nothing better to do.
Redstateboy| 10.4.10 @ 10:30AM
I'm s0rry but can there be any more stupid than a Democrat? They keep voting Democrat and it keeps getting worse - it IS the definition of Insanity. Examine Cities and States run by them and they're failing - terribly - and yet the people in those failing Cities and States.. what do they do?? They continue to vote Democrat.. which is for Socialism.. it's crazy!
Mark James| 10.4.10 @ 10:49AM
That is because the Dems, much like their Communists and Fascists brothers continue to blame their failures on inadequate control, inadequate taxes and obstruction by "right wingers". One can only hope that this recent example offered by the Obama government will wake them up to the fact that the ideology is what is wrong and nothing else. At least there seems to be a glimmer of hope.
Texas Mom 2010| 10.4.10 @ 1:03PM
They vote for it then whine and complain. Then some of them move here and complain that their views are not represented in Congress or in Austin. I say thank God we have not been overrun yet!
GW| 10.4.10 @ 10:21PM
I'd vote Democratic if I were a bum on welfare who didn't feel like working hard. Free health care, food stamps, housing, unemployment, transportation...why not?
jstuart| 10.4.10 @ 11:06AM
The arguments for capitalism over socialism - well argued here - seem overwhelming. We readers wonder why it isn't equally obvious to leftists. But then think of the well-educated suicide bomber Islamists.. they show clearly that we humans aren't rational beings - we may be programmed to believe literally anything - including that blowing up ourselves and others is a good thing - so why not something relatively tame.. like government can provide for all of us forever and evidence to the contrary is irrelevant.
Kurt| 10.4.10 @ 11:28AM
Just offer them ten virgins in the after-life and "they'll do anything" common sense doesn't go" hand in hand" with intelligence!
Bob S| 10.4.10 @ 12:19PM
(psst! It's seventy-two, not ten!)
Texas Mom 2010| 10.4.10 @ 1:05PM
I hope they are all ugly fat MEN!
joli| 10.4.10 @ 7:26PM
OMGOSH! The mental picture that gave me! LOL!
lucian88| 10.5.10 @ 6:50PM
The realization that human beings are irrational is key to understanding the world around us. Not that we are incapable of being rational some times. It's just that all the good created and nutured by rationality can be easily swept aside by the ancient, deep-rooted and elemental forces of irrationality that are woven into the psycho-spiritual fabric of humanity.
Sometimes irrational behavior can be heroic and beneficial. Other times rational behavior can be despotic and evil.
I think we are caught up in these shifting sands and the hope of establishing a just AND free system of human governance is a long way off.
Spyder308| 10.4.10 @ 11:41AM
There are a lot of countries in the EU and the majority of those countries have economies that are healthier than ours.
No one in those countries is worried that if they loose their jobs they will loose access to health care, or loose their homes if they get seriously sick. The people in those countries live longer that we do. A larger percent of their babies survive child birth. Their school children do better than American kids in math and science. Many of the countries are way ahead of us in switching over to clean renewable energy sources. Things in the EU countries aren't just a bed of roses, but things aren't that bad either. We shouldn't be putting them down, we should be copying the features of their societies that work to make our society better.
tdiinva| 10.4.10 @ 1:38PM
Where to start:
Comparing informality rates between the EU and the United States is comparing apples and oranges. In the United States, if the baby draws breath and dies immediately it counts as a live birth. In Europe the baby has to live 48-72 hours before counting as a live birth. Many low birth weight (premature infants) are saved in the US that wouldn't make this cutoff over there. If you count infant mortality on the same basis the US moves way up the list.
Europeans life expectancy is higher than ours because of our historically high murder rate and traffic fatalities. The number of people murdered in Obama's old Illinois old state senate district is probably greater than the rest of the English speaking world combined. Although our highway fatality rates per passenger mile are about the same as the best in Europe we drive 2-3 times the number miles and therefore our exposure is higher. Again normalizing for sociological factors US life expectancy again moves to the top. This is the real measure of the effective of the US medical system in comparison to Europe. European healthcare is at the Medicaid level as is reflected in their inferior cancer and heart attack survival rates.
Your statement that no one is worried about jobs, et al while true is not a reflection of their economic health. It is the very fact that they have all these marvelous but unaffordable benefits that is driving their economies into the ground.
kerry| 10.4.10 @ 1:45PM
as far as health data/statistics, remember that WHO is a leftist organization that bases it's analysis on fairness, not quality.
In Great Britain, preterm babies born under a certain weight and age are not considered babies unless they survive a certain period of time. One woman's story I read in the Telegraph- the authorities refused to give her a death certificate for her week old preemie that died, and instead insisted that the baby was a miscarriage. Here in the U.S., we constantly push the envelope in regards to saving life, including premature babies. We lead the world in access to care, in technology and research BY FAR. England's NHS is a horrific orwellian scheme and falls far behind in cancer survival and patient autonomy- unless you have money. Sweden and Norway all have months long waiting lists, the prime minister of Sweden actually limped around for 4 months to have his hip replaced so he could relate to the commoners, who have to wait that long. Germany has seen doctor flight by the thousands (Canada too, there is a doctor shortage), and many docs go unpaid for long stretches, on top of being micromanaged by government bureaucrats.
And, btw, most European countries are in dire straights with their birth rates, they do not have the populations in place to continue their socialist utopia. Seems abortion is quite popular there too.
anders| 10.4.10 @ 1:55PM
You wrote "The people in those countries live longer that we do." (Not when car accidents and crime are factored out.) "A larger percent of their babies survive child birth." (Not when all live births are counted) "Their school children do better than American kids in math and science." (Yes, and who runs the education system?) "Many of the countries are way ahead of us in switching over to clean renewable energy sources." (The prime example is Spain, which is nearing bankruptcy due to that push.) Look at the big picture.
JP| 10.4.10 @ 2:41PM
You should review some of your facts. Yes, there some European nations that have rebounded quite well since the market collapse in 2008 (most notably Germany, Sweden, and Russia). However, they rebounded because they slashed both discretionary and entitlement spending. Twenty years ago, the retirement age in Germany was 60. Today, it is just under 70. Unemployment benefits, healthcare, and education subsidies, as well as pensions were all slashed. Europe, at least for the time being, is trending towards a free market system (corporate as well as captial gains taxes were recenytly slashed or eliminated), while the US is going the opposite direction. US companies, for the first time in decades, are finding a much friendlier business climate thee than here. Hence, some EU nations are enjoying hiring due to increased presence of US based firms (it is even more pronounced in Asia). I'm not sure where you get your health stats from. But, in the EU there are far less children (esp newborns) than in the US. As a matter of fact, in the larger cities the only people having babies are Muslims. Europe is aging much more rapidly than the US; consequently, the EU doesn't suffer from all of the fatalities one see in a nation with younger people (traffic fatalities, drug abuse, violent crimes, etc...). You are mxing apples and organges. And if anything, the amount of money being spent on health care is decreasing due to rationing, few children, and yes even euthenasia. Europe also enjoys the benefit of being protected by US taxpayers. We spend over $100 billion a year to staion our forces there. That frees up money for social programs.
Also, in Europe home are much more expensive. Few Europeans every get married anymore for the simple fact that they cannot afford housing. It is not unusual to see a 41 year old engineer still living at home. Finally, Europe over the last 30 years has outsourced most of its industries to China and Asia -and with it the pollution. However, they still consume large quantities of fossil fuels (about the same as the US).
You really need to check up on your facts.
Pat| 10.4.10 @ 4:39PM
JP:
“you really need to check up on your facts” – ouch, but you’re very right, it’s hard to claim Europe’s economies are more “broken” than ours. As Mort Zuckerman stated today, America’s unemployment problem is very ugly, it’s not the “official’ 9.6%, it’s more like 17% if you count those who have stopped looking for work and those who are working but only part time. Plus, parents see their college graduate kids struggling to find their first post-college job – new job offers to recent graduates are down 20% over prior years.
With someone from Obama’s staff calling daily to complain, the Federal Reserve is very determined to get unemployment under control, maybe down to a respectable European standard of 7.5% (real rate down to 13%) through brainstorming new ways to stimulate the economy - and hopefully create jobs. Some of the young Turks working at the Fed have suggested “reverse interest” car loans: you pay only the loan principle each month for 7 years when you buy that new Buick or Ford and the Fed sends you a check equaling a 5% interest rate as a thank-you for buying a new car. Others have suggested we take a federal census each month rather than once every 10 years – apparently a job as “census taker” pulls in many of the currently unemployed and we should consider making these jobs more or less permanent ones. Then there is “Shopping Spree at the Mint” – basically, each week some lucky American wins a half hour “spree” at one of the federal mints and is encouraged to scoop up as many newly printed bills as possible; the only kicker being you must supply your own shopping bags and agree to spend every crisp new bill you can grab within 2 months.
There are many other ideas as well – for instance, increase national holidays to 35 per year, folks spend more on consumer items when they’re off work for a holiday but still getting paid by their employers. Halloween, Senator Bob Byrd Memorial Day, Groundhog Day and Doris Day’s Birthday are some of the leading candidates for newly enacted federal holidays. The Chinese, who aren’t too happy with being required to buy more of the Fed’s debt instruments to fund these ideas, have suggested we work harder for lower wages rather than just printing more money. But who do they think we are – Europeans?
Sam Vaughn| 10.4.10 @ 6:40PM
I like it. Let some poor slob that believes in achievement and the rewards that go with it make the stuff. We'll tax them, eat their productivity and then tell them they're too burned out from work to get their ration of ObamaCare.
Kurt| 10.4.10 @ 11:50AM
Spyder308,
Why are you here? Europe is the place you outta be! Kinda sounds like KALEFORNIE, Pelosi would be proud of your comments!
Andy_krow| 10.4.10 @ 1:35PM
Spyder308
It's "lose"!! Not "loose" for Goodness sakes!
"Loose" is what the lefty liberals are being in the asylum!!
Sam Vaughn| 10.4.10 @ 6:36PM
Interesting how the freedom, values and ideas of the US propelled Western and then Eastern Europe. They despised us for it. As history echoes through time I'm reminded why so many people risked the journey to America so many years ago, freedom to be who you want to be on your own merits. As America's tide ebbs away from Europe, the reason's why Europe dragged us into two wars have not receded that far into history.
GW| 10.4.10 @ 10:46PM
"'Culture' is one of those heavily over-used words."
With all due respect, I don't think people consider culture enough when attempting to understand social/political/economic trends. Thankfully, Mr. Gregg, you do.
Culture is the reason why unemployed French workers riot and why unemployed American workers look for part-time work and start businesses. Sure, many Americans rely on the government and have entitlement-driven mentalities (sadly, too many) however the broad, cultural message is that Americans are independent, rugged, tough, and self-reliant.
Relating this to economic conditions, Mr. Gregg is exactly right when he describes what leads to value creation in economies: innovation and competition. In fact, innovation doesn't occur without competition. Unfortunately, when government grows, so does the opportunity for exploitation of said government.
Powerful special interests, whether it be Immelt at GE or union leadership, create no value for society when they enjoy "cozy relationships" with the government. The term is called "rent seeking." Rent seekers look for ways to manipulate the market through special tax breaks, loopholes, strict employment regulations, environmental rules (Immelt/GE and fluorescent light bulbs), bailouts, or other barriers to entry. This distorts the market and inevitably extracts wealth from those who do create or consume goods and services, giving it to powerful special interests.
The Democrats love to rail against special interests, however it is oftentimes their policies that create rent-seeking. They use the term "tax breaks for the rich" to win over poor voters, and then turn around and bail out the rich who voted for them (read: Goldman Sachs).
Coming full circle, culture is ultimately the problem. People who do not value personal responsibility and individualism don't see the system the way Mr. Gregg, myself, and others on the boards do. They view the landscape in a European way...[how do I get mine?] This is why you see riots, corporatist rent-seekers, and massive government programs that extract and redistribute wealth. Cutting government spending is a great start. But to get there, cultures have to want it by voting in candidates who don't promise the world and are realistic about the sacrifices that must be made to return to a more market-based economy, which is the fairest and most optimal way to live in my opinion.
villa benissa | 10.27.10 @ 1:45AM
The kickoff to a crucial earnings season may be center stage for American investors. But an equally important process is playing out on the other side of the Atlantic, with less fanfare. The prospects for European sovereign debt, which plagued markets through the first half of the year, are on the mend amid growing signs that an economic rebound may be taking shape in Europe as well.
On Tuesday, the Greek government sold $2.1 billion worth of six-month bills at rates below the 5% rate available to it through emergency European Union measures. The move follows reports that the Chinese central bank provided a vote of confidence for the country when it purchased $505 million of Spanish 10-year bonds in a well-received auction last week through its State Administration and Foreign Exchange arm.
Even Spain Has Hopeful Signs
The signs of stabilization come just months after many investors had speculated about an outright breakup of the euro. But the currency's decline has helped make European exports more competitive, especially for industrial powerhouses like Germany. Exports there soared 9.2% in May, the biggest gains in 10 years, the German Federal Statistics Office reported last week. Unemployment dropped to 7.5%, after falling for 12 months in a row.
The high-end German manufacturing sector posted an especially strong performance. On Tuesday, automaker BMW issued a bullish report. Like rival Mercedes maker Daimler Chrysler, BMW is seeing surging demand in fast-growing markets like China.
Europe's troubled Southern economies, of course, aren't faring nearly as well as Germany. And the difference in fortunes could add further stress to already tense relations. But even Spain, with a jobless rate around 20% -- Europe's highest -- saw a sharp decline in unemployment in June.
Still, thawing credit conditions remain the prerequisite for further gains. And as signs mount that the panic that gripped investors at the start of the year may be receding, a further pickup may be in store.