Loose Canons

Sinking of the Euro-Titanic

As the Eurozone collapses, the old continent's future will only become increasingly bleak.

By 11.7.11

Send to Kindle

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?

History teaches us only that Europe's map will be redrawn -- again -- as a result of the euro's collapse. The most important question, then, is who will be the cartographer?

Here the crystal ball goes dark. It is obvious that whatever nation could wield a large enough economic sword could be Europe's master, but the price of such a sword is too high. It is just as obvious, and just as wrong, to say that a potential conqueror from the east would find Europe an easy target. But America -- on cultural grounds if nothing else -- would likely bar that conquest if we were still able.

There is no prescription to cure Europe's woes. Even if there were, the Eurozone nations are incapable of following it.

If only the Greeks -- or at least Greek women - made a study of their own culture. Aristophanes had a prescription for what ails Greece and the rest of the Eurozone, though it's probably too late for even that medicine to work. The Lysistrata remedy might have worked a decade or two ago. Now there is nothing that can prevent economic Darwinism from working its evolution on Europe.

Like this Article

Print this Article

Print Article
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. He is coauthor (with Herbert London) of the new book The BDS War Against Israel. You can follow him on Twitter@jedbabbin.