Tuesday, January 14, 2014

Europe just looks worse and worse

Today it became almost apparent that President Hollande of France is involved in a sex scandal. Historically speaking, this doesn't look good and his impeachment is looking likely. This is a gigantic blow for the Socialist Party in France, and all of Europe.

The current political outlook of Europe is bleak. The past four years have seen the rise of radical right wing ideologues who have turned the economy from growth to depression. The economic growth rate of the European Union was -0.2% before inflation which was 2.6%, putting real GDP growth rate at -2.7% with inflation. This is horrendous. When you look at important trade blocs, the European Union is one of the largest in the world with a GDP (PPP) of $16 trillion, the United States is at $15.7 trillion, and China is at $12 trillion. The economies of China and India equal the economy of the European Union. To have such an incredibly large trade bloc undergoing a contraction of -2.7% whether it is concentrated or not is a moral crime, and the policies need to be observed at and improved on.

The current ruling party has shown absolutely no interest in changing their ludicrous policies of shrinking government budgets which are showing exactly what some basic understanding of GDP and the nature of the economy will predict, that we are all interconnected and when one part of a country or trade bloc undergoes economic policies that must be designed to destroy them the entire bloc will be damaged. That is all austerity is, an economy-killing lie, and it has completely failed in its stated goal of eliminating debt. Greece, Spain, and Italy have not seen their debt per GDP ratios go down significantly over the past four years, staying where they were, while people protests on the street and 20% of the Greek economy is gone after 4 years of economic contraction which was preceded by only one significant factor which is the grim reaper of economics, austerity.

What Europe needs is to see clear economic resistance to such idiotic policies that are proving once again how bad austerity is (as it did in the period of 1929-1933, part of 1937, and 1981-1982 in the United States when we practised austerity). The definition of an idiot, according to Albert Einstein is someone who tries something once and fails, and then tries the same action again expecting a different result. Merkel and the rest of the extremist leaders of the European Union undoubtedly fall under this definition of idiocy. The one leader of Europe's largest countries currently having a relatively strong economy to the victims of austerity who had the potential to threaten her power along with her allies was Francois Hollande but with his political future almost certainly threatened, there remains absolutely no leader of the political left in Europe.

It looks like Europe is going to have at least 4 more years of failed economic policies. This is extremely dangerous because it will feed the political ambitions of Golden Dawn who are successfully convincing Greeks that it is the Germans that are destroying Greece (and talking about governments they aren't completely wrong) which will lead them towards potentially leaving the European Union voiding the Schengen Treaty, which helps curb racism which feeds the political power of the self-described fascists in Golden Dawn, and removing trade connections with the rest of Europe which will make their economy suffer given how their largest trade relations are with the rest of the European, and people-to-people communication between Greece and the rest of Europe will suffer. All of this assuming that Greece leaves the European Union as a reaction to the idiotic policies.

Spain and Italy are in similar boats with the implementation of austerity and this can happen to them also.

I wish there was a bright spot of hope, but right now there doesn't seem to be anything that is likely to hold Europe together in the near future barring the unexpected rise of a compassionate uncompromising leader of Europe over the next 4 months which seems incredibly unlikely, which will not lead to anything good in my observations. There really doesn't seem to be anything good right now.

This also matters to the rest of the world because exports from America to Europe totalled $340 billion (2% of America's GDP, 2% of Europe's GDP) and exports from China to Europe totalled $396 billion (3% of China's GDP, 2% of Europe's GDP) and imports from Japan to Europe totalled $106 billion (2.3% of Japan's GDP) meaning that the continued fall of the European economy will be felt globally, and it should concern everyone in the world.

It's not just Europe that is looking worse than it did several months ago, it's the entire world.

Sorry to be such a bummer, but such things must be said.

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