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  1. Wealth
October 18, 2011

European Disunion

By Spear's

Emotive calls to defend European unity make for a reassuring sound bite but ignore some harsh realities

Emotive calls to defend European unity make for a reassuring sound bite but ignore some harsh realities.

President Sarkozy proclaims: “All Europe is one family and we cannot let down any of our members,” however again this masks the reality. “Europe” was designed to be an economic union not a political union. The former reflects the optimism and spirit of free trade with minimal tax and regulation inhibitors. The latter is the usual albatross of the elite illiberal mind from hard core socialist Jacques Delors to the current crop of leaders who continue to muddle these concepts intentionally.

Yes, the euro is an attractive concept for a common currency and facilitates the velocity and ease of commerce. However to be credible it must be considered as a sound monetary unit of exchange and store of value. This is based on the underlying issuer’s economic soundness. “Europe” has never been collectively sound.

In a quest to “harmonize” and broaden the political union the elitist mind has forced and pushed a wide array of nations with disparate sovereignty, history and indeed economic characteristics into this grand project. It has further never been able to reconcile nor control the fiscal policies of these member states for the simple reason of said sovereignty; the electorate has rejected the sacrifice of their independence for the “greater good”.

Time and again when measured there is popular support for economic freedom between all member states but not political union. So the genius of EU leadership created a Central Bank to control monetary policy but with minimal say over the budgetary and tax policies of it’s members; this is the equivalent of an elephant attempting to fly. It simply is unnatural.

Between the misrepresentation of their financial state and simultaneous profligate spending, several members at at or near bankruptcy. They are not euro-compliant and cannot be made so any time soon. The real recipe for saving Europe is not a rerun of centralized bureaucratic  nanny states  a concept run by elites but a return to the original concept under the Treaty of Rome. A union of economic vibrancy.

This still allows for a euro but only for those states who have the creditworthiness to uphold this standard. For those states who have failed they must by necessity return to their local currency and restructure and default as necessary to be capable of a return to growth and prosperity for its citizens.

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Free Trade, yes. Euro no – unless earned. Greece is the most obvious example. There is no measure of elite “austerity” that will return it to growth or pay back the debts. It is a fool’s errand. These steps are hard, embarrassing and a setback for all but it is the only course for survival of the economic wellbeing of the “Community”. It is conceivable when the truth is known that many members will leave the euro but in the absence of surrender of sovereignty the elephant will never fly.

Hocus-pocus issuance of ECB guaranteed bonds simply further indebt the strongest countries and sooner or later taxpayers will revolt – back to sovereignty.

The second canard is that this cannot happen because banks are long sovereign debt of the bankrupt nations. This is true and unfortunate. Again the destructive creativity of capitalism must be allowed to work. Some banks will and should fail, perhaps certain ones will be nationalized but in the end the loss must be bourne by the shareholders not the taxpayer.

Finally a recognition that Europe must return to a growth model to survive. The penal nature of the social-democratic model simply does not work. It has always been a grand illiberal lie. State finances, demographics and stagnation of competitiveness are all signals of failure . National leaders must address this with a call to individual effort and an end to the collective state with the socialists’ stillborn concept that through rigid employment laws, unaffordable pensions, “free” healthcare and no outlays for defence that the costly illusion of the “European” way of life can be sustained.

It has led to near bankrupt union, slow growth and most importantly a surrender of our vitality so important to defending those western values that allowed us to dream that we could create this false utopia in the first place.

In place of demonizing capitalism and the pejorative that “that is the Anglo-Saxon way, not Europe’s” must come the enlightened reality of belief in the dignity of the human spirit and enterprise as the only known road to prosperity.

The debate over the euro and saving Europe are all valid: they are simply emphasizing the failed concepts of pessimism if our leadership truly believes in this objective they will begin now with a policy of optimism. It takes courage and faith in each other as opposed to these false gods from the other side of the iron curtain.

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