Viva la Europa

We are currently witnessing the biggest play of fools in the history of the world in Europe. These mistakes happened 100 years ago when trade broke down across Europe leading to one of the largest wars the world had seen to that point.

In international politics there are some major theories which talk about how to bring peace to the world. One which has some support is the Democratic peace theory which (as the name implies) is the theory that democracies don't go to war with each other.

However, the theory which has very solid support is the interdependent peace theory. The idea is that if you trade with other countries you will not go to war with them. The strength to this theory is it explains why Europe doesn't go to war with Russia while given tensions democratic peace theory predicts war. European leaders have no incentive to go to war because of the imports and exports they have with Russia.

Now when it comes to the ongoing austerity crisis and depression in Greece, this theory implies a lot for the future. If Greece severed it's connections with the European Union they will very likely find another ally. Given their treatment by the EPP I don't see too many short term incentives for them to stay in the EU.

Putin is currently very interested in expanding his power and we have seen him reach out to Greece in particular as being his next target in his power grab. Given the human rights records of the other countries he has close relations with,  Kazakhstan, Iran, Belarus, Syria, and North Korea being the most impressive examples, I find no reason to believe this change in international relations will bring anything good to Greece or Europe. If this pattern were to continue than than I see no reason Putin would then try in a carrot and stick approach to expand to Italy, Spain, and Portugal. Adding over 50 million people to his alliance is something I can see him do.

Now, this is far more than just a shift in power relations and who the biggest ally of these medium sized nations will be. I expect that as Putin grows his relationship with these countries we will see the same pattern of a reduction in the validity and transparency of elections like we see in Russia today. This will be a massive reduction in the human rights in those countries just like the Franco regime. I see nothing besides EU membership standing in the way.

We also see another trend in the EU today which is already eroding their rights. What is happening today in Hungary is very disturbing and hopefully won't expand to other countries. The current prime minister of Hungary has been accused of undermining human rights by multiple human rights organizations. https://www.hrw.org/europe/central-asia/hungary The EPP is not willing to hold their member accountable to the laws of the European Union, further proof of their true intentions of undermining liberalism and the EU. This was never about Greece's debt from the start. It was about undermining the largest barrier to fascism in Europe.

Before the EPP gained power in the EU we did not see the problems in Greece and Hungary that are happening today. I love Europe and don't want to see an erosion in their liberties or a failure of one of the greatest political experiments in human history. None of this was inevitable and it was all artificially manufactured. It is time for those who love Europe to stand up to the EPP and Putin and save the EU.

The last two breakdowns in trade was in the years prior to the first and second world wars. The current erosion of trade and human rights is a threat to world peace and must be stopped.

Austerity is turning out to be Merkel wasting German taxpayer dollars

http://www.bbc.co.uk/news/business-25291036

I am reading this article and the one thing that comes to my mind is none of this had to happen. Everything that has happened with the European economy over the past few years was always completely unnecessary and all of the responses have been wrong.

If we review the European economy in 2008 the picture was very different. Greece and Germany (the "model good" and "model bad" economy the media loves to talk about) were doing just about as well in their economic statistics, and one wouldn't anticipate anything that Merkel has turned out to be for the world.

Then the economic collapse of the world happened. Greece and the United States had been having good economies for a good long while on paper, and all three had been running annual deficits since 2001 when the so-called "fiscal conservatives" were in power in these countries.

The reason Greece had a deficit in the first place is that the government didn't have income to pay for the goods and services people in developed countries expect. It is the same in every country where some people get all the benefits of being in the country but hide their money in income tax free countries to avoid paying money. This was why they had a deficit and besides that one factor, everything else in 2009 was not looking unusually terrible. All of the countries in the EU were looking really good.

Today there are riots on the street in Greece and Spain because their economies is so poor today.

The EU government (led by the European People's Party, EPP, the right wing organization) decided the solution to the lack of revenue for the government to provide countries was to fire millions of public workers and somehow through magic this was going to balance the budget.

But the problem was that firing millions of employees was going to dry up their spending, and the contraction expanded to the private market, which is why Spain and Greece have unemployment rates north of 20%. The only major change over the past few years has been the austerity, with crashing demand for services and businesses folding as they are unable to get income to stay afloat as the economy contracts which feeds on itself.

The European Union government took a situation that was not ideal and turned it into a depression.

What should have been done is look at the issue, Greece needs to keep borrowing more money to pay the previous borrowers which means the interest will be compounded, and if Greece was ever unable to get borrowers (which I am unaware of any time this has ever happened, it sure didn't happen to Japan with their Debt/GDP ratio over 200%, the highest in the world) it would mean they would need to find some way to pay creditors, but this wasn't happening. If Greece wanted to pay off its debt it would need to find a way to cover the debt (which is preferable and keeps a high credit rating) or write it off (and no one would ever lend to the Greek government again). The solution then is to find revenue to cover expenses. This is not what the EU Parliament mandated however, and Greece has found their economy contract in an epic proportion, because they tried to screw a screw with a chainsaw.

Greece today has a demand curve that has shrunk which means there is no money to be made by starting a business (which is how economies grow) and it needs to grow somehow.  Being part of the Eurozone, it is represented in parliament and the decisions with the central bank are made together, and as long as the EPP controls parliament they are unlikely to do measures that will move the demand curve north so that starting businesses becomes profitable. People won't start making businesses in Greece if they are basically destined to fail. They need to adopt Keynesian economics and expand the demand curve by hiring unemployed Greeks and Spaniards so that it becomes profitable to start businesses because that is the only way the economy will grow.

On top of all these mistakes the northern states now need to subsidize the southern states to grow their economies so the EU can stay strong, which will waste French and German taxes on something that never had to happen. Fiscal conservatism at its finest.

Unless if the EPP wants to destroy the EU, and if that is the goal they are doing exactly what they would want to do, because continuing austerity from parliament will turn into so much apathy towards the north and parliament (and the majority of Europeans live in the North) which has the potential to divide the European Union. The resentment has the possibility of being a powerful force to drive Golden Dawn and other xenophobic parties into power in Greece and Spain (think Franco) on the anger towards Northern European governments which will be bad for the world.

I would rather see the EU work towards getting Greece, Spain and now Cyprus on their feet. Merkel (the de facto leader of the EPP and EU) saying that they will not support Cypriot banks is what really caused the current recession which was completely unnecessary and poorly though out. If someone wanted to destroy the Europe Union they would vote for the EPP because that is exactly what they are doing. If someone wanted to start a fascist revolution the first step would be removing the Schengen Treaty and Council of Europe which will remove the peaceful regional means of communication between national government and remove the peaceful means of reconciliation which can't lead to anything good.

I really hope the EPP is removed from power in the next election after their brutal mismanagement of the world's richest continent. I may be American, but Europe is our strongest ally and largest trading partner and I plan on going back to Europe ASAP, so I have a lot riding on the next election as does everyone in the world.

One extra source:
http://www.csmonitor.com/Business/The-Circle-Bastiat/2010/0503/Why-are-Greeks-not-paying-their-taxes