Europe is in a mess and the world is so intertwined that we cannot avoid it impacting our economy. The euro seems doomed to fail because it is dependent on Germany giving back much of the gains received from the Euro Zone experiment. This is not likely unless Germany concludes they will lose even more by letting Europe continue its downward spiral. They were able to significantly boost imports, which in turn helped them reunify their nation after East Germany’s collapse. If, when the euro zone fails, the consequences may be as bad as our 2008 meltdown.
It is hard to envision Europe becoming a united nation. The United States consolidated a major portion of North America by obliterating the nations that previously occupied the land – the Native American Indian. This will not happen in Europe.
“The process of integration was spearheaded by a small group of far sighted statesmen who practiced what Karl Popper called piecemeal social engineering. They recognized that perfection is unattainable; so they set limited objectives and firm timelines and then mobilized the political will for a small step forward, knowing full well that when they achieved it, its inadequacy would become apparent and require a further step. The process fed on its own success, very much like a financial bubble. That is how the Coal and Steel Community was gradually transformed into the European Union, step by step.
…The process culminated with the Maastricht Treaty and the introduction of the euro. It was followed by a period of stagnation which, after the crash of 2008, turned into a process of disintegration. The first step was taken by Germany when, after the bankruptcy of Lehman Brothers, Angela Merkel declared that the virtual guarantee extended to other financial institutions should come from each country acting separately, not by Europe acting jointly. It took financial markets more than a year to realize the implication of that declaration, showing that they are not perfect.” George Soros, Remarks at the Festival of Economics, Trento Italy
Consensus sometimes comes out of a crisis. Let us hope it happens sooner than later.