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Loose Canons
Sinking of the Euro-Titanic
As the Eurozone collapses, the old continent’s future will only become increasingly bleak.
HEIDELBERG, Germany: You don’t need to look through the poet’s glass — and darkly — to see the age-old strife returning to Europe. After the G-20 summit in Cannes, all that is evident is economic wreckage. As someone else wrote recently, the “sick man of Europe” is Europe.
And for those of us conservatives who have used too freely the analogy of today’s European approach to Islamic terrorism to Europe of 1938, it’s quite apparent that we’ve had it wrong, in part. Before the new Europe progresses to 1938 again, it has to pass through at least 26 years of economic strife.
It’s not 1938 again in Europe: it’s April 1912. And the nations crowded together in the Eurozone are more like the huddled steerage passengers who set sail on the Titanic than the members of an economic union. And, unlike the Titanic’s passengers, the survivors of the euro’s demise will owe their fate to economic Darwinism.
Germany is not sick, at least yet, but Prime Minister Angela Merkel will not be able to save it from sovereign debt contagion forever. In the past few days, I’ve seen a bit of Germany and talked to many Germans. Not enough to know them or their nation, but enough at least to see part of their economy’s strength.
In Munich, the sparkling BMW factory and museum overshadow the Olympic Park apartments where, in 1972, Black September terrorists attacked members of the Israeli Olympic team, killing two immediately and nine more when German forces mounted a botched rescue days later at the airport.
Munich is now all-BMW. The factory — a UAW nightmare — is about 85% automated. About 700 robots do everything from spot-welding to painting in a computerized ballet of hydraulic power. On Munich’s streets, there’s a jeweler selling wristwatches for €20,000 and up on every corner but few — if any — sales are made to passersby. You can’t even observe much in the beer halls of Munich. There is a rougher edge among the patrons than you see in the sidewalk cafes and better restaurants, but probably no more so than some Europeans might find in a country-western bar in the States.
The only news here that counts is the dour news from Cannes. In that news, and the continuing euro-drama, is the age-old strife. But not what movie-makers might wish for.
At Cannes, France’s Sarkozy, and Germany’s Merkel apparently browbeat Greece’s PM, George Papandreou, sufficiently that he’s given up on holding a plebiscite on the bailout agreed a week ago at the EU summit. But neither France nor Germany was crazy enough to guarantee the EU bailout fund or sweet talk the IMF into guaranteeing Greek solvency. By the summit’s end, a tranche of the bailout for Greece agreed on before the summit was being held up to see how long Papandreou’s government would stand and whether the bailout “agreement” for Greece — which Papandreou’s call for a plebiscite upended briefly — will survive.
Whether it does matters not at all. The 50% “haircut” of Greek debt — whereby bondholders would see their investments’ value cut by that percentage — is voluntary. Which means no one in their right mind will take it without negotiating a better deal than the Greek government can afford. (Greece can’t afford it even with the 50% reduction, but it’s very impolite to write that.)
Without the EU bailout fund or the IMF, Greece has only one hope and it’s not the continuation of Papandreou’s term. Both Greece and Italy can only be “saved” — for a year or two, not permanently — by the European Central Bank. If it were allowed to simply print more euros to inflate the currency and allow temporary relief to Greece and Italy, their economies could limp along for a few more months, even years. The loss would be absorbed by the more prosperous European economies, Germany and France.
But the endgame is in sight. As Britain’s Maggie Thatcher and her allies said decades ago, nations which do not share a government cannot share a currency without sacrificing those who are financially responsible to those who are not. When the euro collapses, what will Europe look like?
Like the sinking of the Titanic, the unfolding tragedy will start slowly and accelerate to a climax. The Eurozone will have to shrink, ejecting Greece first and probably Italy, Spain, Portugal, and others in an increasingly rapid succession. When it breaks up entirely, it’s likely that the German economy will be the least damaged.
There will be an era of social unrest in Europe that may continue for decades. Poverty is ugly, and when there is no route to escape it people turn against their governments, then against their fellow citizens, and last against those other nations within reach. Governments will fall, people will riot, and the only winners will be nations such as Russia that will seek hegemony over them.
Please note that here I do not include the Germans who — at this point at least — seem wise enough to not desire economic hegemony over western Europe. Unstated is the fact that when the Eurozone collapses there will be little or nothing worth conquering in Europe. No nation can afford to be the ruler of hundreds of millions of peons looking to the state for sustenance. The Germans may be also be wise enough to realize that they cannot defend themselves from Russia and seek domination of Europe at the same time.
The face of Europe is barely visible beneath two millennia of scars. The Roman Empire and its fall, Charles Martel’s stand at Tours against Islam, the Ottomans, Russia, Napoleon, British imperialism, two World Wars and the Soviet Union have all come and gone. What will come in the post-euro world?
About the Author
Jed Babbin served as a Deputy Undersecretary of Defense under George H.W. Bush. He is the author of several bestselling books including Inside the Asylum and In the Words of Our Enemies. You can follow him on Twitter @jedbabbin.
Letter to the Editor View all comments (35) | Leave a comment
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Bill Hussein O'Stalin| 11.7.11 @ 7:19AM
When their phony currency falls, can ours be far behind?
Howard| 11.7.11 @ 8:31AM
Unfortunately Obama still looks to Europe as a model for progress and fairness. He would like nothing more than to become them, but, using his Ivy League "experts"; avoid the problems they face which are directly caused by those policies.
Obama's conceit knows no bounds.
PolishKnight| 11.7.11 @ 12:52PM
Consider this: When leftists talk about diversity, do they mean a workplace in the USA comprised of a mix of 90% European Americans from Belgium, France, Germany, Poland, Italy, etc. and 10% non-Europeans? I've just described the demographics of most European countries. They worship Europe even as Europe would be considered racist if judged by leftist standards. How many half black European PM's are there?
PJ| 11.7.11 @ 9:17AM
"Governments will fall, people will riot, and the only winners will be nations such as Russia that will seek hegemony over them."
I'm not too sure how 1 can conclude that Russia will be a possible winner after the collapse of Europe. The Russian population is already decreasing rapidly. What manpower will Russia have to enforce its ideas on the rest of Europe? Putin is creating strategic alliances with others just to ensure Russia's survival.
CrackerHound| 11.7.11 @ 12:06PM
PJ said: "Putin is creating strategic alliances with others just to ensure Russia's survival."
Ah, but this is what should be worrisome. With most nations in turmoil, strategic alliances are what most will seek. What actions will those alliances take under the gloomy scenarios that lie ahead?
Will Germany be forced to defend herself against a collection of desperate Euro outcast? Will a Sino-Russian alliance be emboldened to threaten America and go after "strategic" land grabs such as Georgia or Taiwan?
I see no way out of yet another earth shattering upheaval and war. The Arab Spring has yet to be shaken out and the effect of the imminent Euro collapse is yet to be seen....tough time ahead, perhaps the toughest of time yet.
PJ| 11.7.11 @ 1:42PM
I would normally agree w/you on what you think about Russia if their population collapse wasn't eminent. Putin is a smart man. He is making alliances to prevent any catastrophic problems from occurring similar to that which will happen in Europe. If Russia is going to start trouble it will be done soon -------like within 10 yrs. And that goes for the Muslims & China. Their population replacement rate is almost as bad as Europe.----------- This is a worldwide problem!
The troublemakers are going to have to start their trouble soon or else they will not have the manpower to start any later.
oldfart| 11.7.11 @ 10:02AM
Socialism is a great idea until you run out of other people's money.
Mistral| 11.7.11 @ 10:22AM
When Hussein Obama was in Europe recently it appeared he was blaming Europe for American economic ills. Europe has to do this or that in order for the USA, he has castrated economically speaking, to come right. This Obama is quite a comic when all is said and done. Indeed, the Eurozone will collapse for sure because at bottom the peoples of Europe are not Europeans at all but they all have a national identity first.
However, USA woes have been fabricated by successive presidential incompetencies which have little to do with European maladministration and neo-fascist centralism. Mr Hussein has just accelerated the demise. The sooner the Euro sinks the better, then each economy will have to sort out its own problems which separate currencies are better at regulating. Italy will be able to knock zeros of the value of the Lira as it used to and France will be able to manipulate the Franc as it was once able to. The world will also be able to have faith in a solid Deutschmark which Germans were completely insane to abandon in the first place. Meanwhile, the Pound Sterling continues to hang on but it almost has the same value as the dying Euro - strange how parity has nearly come about especially when every effort has been made to save the pound. Has this market revaluation been engineered one has to ask oneself. It certainly is suspicious.
A. C. Santore| 11.7.11 @ 10:41AM
What a devastatingly accurate assessment, Mr. Babbin! Priceless! Thanks you!
Paul from SA| 11.7.11 @ 10:42AM
Though our US states share gov't and currency, there are similarities with their problems within our population and political class.
We have responsible, hard-working, successful, providers and then we have the moochers, the takers, the lazy (Republicans and Democrats).
Redistribution -- within the Euro zone, within a nation, within a state, does not work for long.
RND| 11.7.11 @ 12:06PM
But we do "redistribution" all the time. Just observe how often your state governor cries, whines (and behind closed doors goes to his or her knees -- begging) for FEMA dollars.
Latest example: Conservative?? (ha, ha) VA Governor Bob McDonnell
**And are these Disaster Dollars ALL? really? funneled 100% into the damage from the disaster?
What do you really think?
Paul from SA| 11.7.11 @ 1:58PM
Some redistribution (taxation) is necessary, say to fund things like the branches of the gov't, military, police.... and yes, one-time disaster relief.
I'm talking about political redistribution, money from Republicans to Democrats, designed to help Democrats retain power.
Franco| 11.7.11 @ 11:21AM
1912 was also the time of one of the Balkan wars--Greece isn't really a European nation, but a Balkan one, and never should have been allowed to join the Euro nations. To papraphrase Bismarck, the entire Balkans is not worth the savings of a single Pomeranian pensioner.
RND| 11.7.11 @ 12:12PM
The Iron Chancellor Bismark did not know the exponentially explosive value of Adriatic Sea coastal properties.
Balkan based UN staffers (yes, those selfless caring humanitarians with babypowder blue) sure did in years 1996-2000.
shipley130| 11.7.11 @ 2:02PM
Excellent observation. Someone has been reading financial information.
cicero| 11.7.11 @ 11:24AM
For those of us who invested heavily in small children over the years, and nurtured our investments, we have seen them grow and increase in worth beautifully. In the event of financial trouble, we will never have to worry about a roof over our heads, or a place at the table.
For those who invested their time and wealth in things, and did not waste time or effort in such trifles, too bad. Europe, Russia, Japan, etc., who have a negative demographic - so sorry.
Audace| 11.7.11 @ 12:02PM
Please tell us why you are in Heidelberg, Mr. Babbin. Danke.
For a real car story, head to the Opel factory just to the east of Mainz or the Opel factory to your west in Kaiserslautern. Then the former coal-works further west in Saarland and Saarbrucken.
That is the real picture of Germany's economic future.
Hedgehog| 11.7.11 @ 12:29PM
Methinks the method employed by Lysistrata to concentrate the minds of the Greek menfolk is unlikely to do much good. Indeed, with all of Europe in demographic decline, it would appear that the women have already used Lysistrata's remedy for lo these past twenty years, with the result that now there are fewer and fewer productive citizens to pay for the upkeep of the freeriders. Bummer.
WN| 11.7.11 @ 12:33PM
If countries like the recent addition of Slovakia as a monetary Euro participant can (allegedly) seamlessly be added to the original year 1999 group of 13 European nations with the EURO as the common currency, well:
Why cannot a present-day EURO currency member state be "seamlessly" dropped?
[For the brainless: A country in Europe can be a member in the EU without adopting the Euro Dollar as its currency. Fact: Most EU member nations are not using the EURO.]
All the handwringing and claims of doom, Dark Ages, and increased taxation of healthier EU member states' citizenry is malarkey.
In 6 months the Greeks could be back to their Drachma for daily commerce. And? Doom & Gloom? No.
Internally the Greeks need to bust their 2 out of every 5 adults working in the government, 16 out of every 100 working age adults on the dole, early retirments for government workers, overcompensation in retirement packages, etc. The Greeks MUST embark on massive internal national housecleaning.
The Greek nation is presently an economic weakling hurting the overall EU status, yes, but it is a drag not a deathknell.
There is no imperative to "Save Greece!" Or?
None of this makes sense. Europe has BIG problems to fix. But: Whether 11 million citizens in Greece use the EURO dollar as daily currency in their wallets for shopping or not is a meaningless thing.
What gives?
I have my conclusions. Fellow readers, what are yours?
shipley130| 11.7.11 @ 1:59PM
Germany will go back to being Germany, England will go back to being England and France will be confused, as usual.
Controse| 11.7.11 @ 2:13PM
Economic Darwinism cannot be prevented. It can only be delayed. Eventually those that are productive kick aside those who are not. Those who are not productive don't like being kicked aside. That is why those of us who are productive have police.
Tiddly| 11.7.11 @ 2:19PM
"It is just as obvious, and just as wrong, to say that a potential conqueror from the east would find Europe an easy target."
Well, the Middle East is conquering it right now, through immigration and the productive wombs of its women, while the negative birth rate of Europeans accelerates the conquest. Europe will eventually be a caliphate, and all its cathedrals minareted mosques ala St. Sophia.
As a result of socialism and hedonism, Europe is headed for a new Dark Age, Islam and sharia, that will last for centuries, just like after the fall of the Roman Empire
Occam's Tool| 11.7.11 @ 8:17PM
Tiddly,
correct. Precisely so.
Paul from SA| 11.7.11 @ 3:01PM
Is there now a race to the bottom? Would you rather be the debtor or debtee?
If you owe money, and you know you'll be bailed out, especially if your situation is dire, it makes sense to be more reckless and irresponsible.
JP| 11.7.11 @ 3:01PM
"This is the way the world ends: This is the way the world ends: This is the way the world ends: Not with a bang but a whimper."
Jed, I hope you enjoyed Heidleberg. It's a wonderful city. I love Munich too. Unfortunately, thier beer isn't as good as it once was. Germans now drink far less beer than they used to, and the younger German tastes are vulgar. A Barvarian Helles used to be a thing of perfection. Now, most German beer tastes like Stella.
One final note: I wouldn't worry about the Russians. Their men are so few and so drunk that they'd get lost on thier way to the Elbe and end up invading Estonia.
Occam's Tool| 11.7.11 @ 8:18PM
The average Russian male age of death is UNDER 60 years of age.
Niniane| 11.7.11 @ 11:47PM
According to my relative, the Russian invasion of Estonia was sudden. She worked for a family of super-communists who basically gave the directions of invasion of Estonia. She was back in her little town cheering the bicycle racers and runners when the Russians walked in. From a fairly well-off family, their money was suddenly worthless, the country house became state property and their city home was bombed. Then the Russians raped the country, bringing in empty trains labeled "Milk for starving Estonians" and removing whatever they could get their hands on.
Even today, go to Narva, the third largest city in the country and everyone speaks Russian. The invasion was for strategic advantage for more seacoast since Murmansk was frozen most of the year and the St. Pete coast gets crowded for major military operations. All I can see is Estonia, Latvia and Lithuania will crumble soon, supported by the Russian Red Army folks who never went home after the countries' liberation.
But I agree the Russian society has fallen so far apart that it will take a KGB agent as leader to whip them back into shape. Putin wrestles bears so he will be up to the job.
cicero| 11.7.11 @ 3:34PM
Why did no one see this coming? I was in Greece and the Adriatic in 1988. Even then, no other country other Greece would take the drachma. While ikn Athens, you had to make sure you used a credit card, or assumed you would have to spend your drachmas before you left the country.
And, no matter what currency you used to make a purchase, the vendor would always make change in drachmas.
At the same time, while in Turkey, no matter what currency you chose to use, the change would come in that currency. They would not recognize the drachma.
Albert456| 11.7.11 @ 5:16PM
Don't panic/celebrate folks just yet - European history is long and despite all the ups and downs I am willing to bet it will be a largely prosperous place for another century or two at least. In fact most places west of Berlin and north of Rome are highly productive. As for situation with muslims it's not so different than Mexicans in US.
Occam's Tool| 11.7.11 @ 8:17PM
Dear Albert:
consider the birthrates. Europe is doomed. Incidentally, there are fewer Mexicans coming and fewer being born. We will eventually deal with our immigrant problem. In addition, ours are nowhere near as bad as yours.
Barn Cat| 11.7.11 @ 6:27PM
When Greece defaults it will lead to bank collapses and other sovereign debt defaults. Trillions will be lost. American banks and investment houses will fall too. What if the Federal Reserve creates $10 trillion to stabilize the world's banking system? The dollar could lose a substantial amount of value virtually overnight.
POST American| 11.8.11 @ 3:20AM
------BTW----- speaking of the ever
deteriorating ---'by design'--- EURO mess
DO CHECK OUT the latest videos of
WE ARE CHANGE confronting British
PM hopeful, and EURO sellout's latest
front man, David Miliband in London.
--------------------PRICELESS!
Owen K.| 11.8.11 @ 1:05PM
Excellent article. Of course the European Central Banks will do their best, as part of the international banking cartel, to preserve the EURO as long as they can. The demise of the EURO will put every fiat currency in the world at risk. But, as the article states, the ship will slowly sink.
POST American| 11.8.11 @ 11:11PM
----CATCH THIS----
In the 'EU' now --teaching of ALL national
history is being suppressed, likewise
ALLLL history pre-WWII ----national flags
and anthems are also being ditched. Europe
is now to be seen as a 'brand' -------like a product -----like livestock.
Further, we learn the architecht of Greece's
well-engineered collapse, Papandreious,
is being hurled by the Greeks because he's
spent almmost NONE of his formative life
in Greece.
Further, it emerges he comes from a family
of professional globalist subverters. In fact,
even involved with the bunch intent on bringing
down the Czar during WWI.
From Lenin ---to Hitler ---to MAO ----to NOW
-----'permanent revolution' they call it.
----------HUAC meets NUREMBERG 2012----------
-------------------------we call it--------------------------