Best of the Week
Most Popular
1.Bitcoin War Begins – Bitcoin Cash Rises 50% While Bitcoin Drops $1,000 In 24 Hours - Jeff_Berwick
2.Fragile Stock Market Bull in a China Shop -James_Quinn
3.Sheffield Leafy Suburbs Tree Felling's Triggering House Prices CRASH! - Nadeem_Walayat
4.Bank of England Hikes UK Interest Rates 100%, Reversing BREXIT PANIC Cut! - Nadeem_Walayat
5.Government Finances and Gold - Cautionary Tale told in Four Charts - Michael_J_Kosares
6.Gold Stocks Winter Rally - Zeal_LLC
7.The Stock Market- From Here to Infinity? - Plunger
8.Ethereum (ETH/USD) – bullish breakout of large symmetrical triangle looks to be getting closer - MarketsToday
9.Electronic Gold: The Deep State’s Corrupt Threat to Human Prosperity and Freedom - Stewart_Dougherty
10.Finally, The Fall Of The House Of Saud - Jim_Willie_CB
Last 7 days
Who Knows What Will Black Gold Do in Coming Week? - 18th Dec 17
Gold’s Shooting Star and Its Implications - 18th Dec 17
UK Used Car Christmas From Dealers Buying Discount Sales Bargains - 18th Dec 17
How To Play The 2018 Cannabis Boom - 18th Dec 17
Should You Consider Investing/ Buying Gold or Bitcoin? - 18th Dec 17
Gold EFPs: Absolute Proof that the Paper Gold Price is a Fraud - 18th Dec 17
Gold – Technical Obfuscation, Fundamentals, Predictions - 18th Dec 17
Stock Market Final Thrust is Likely - 17th Dec 17
Never Mind Tea Leaves, Here’s a Strong Signal from the Economic Dashboard - 17th Dec 17
As Bitcoin Breaks All-Time Highs Near $18,000 Its Future Has Never Been So Uncertain - 17th Dec 17
Best Time / Month to Buy a Used Car From a UK Dealer - 16th Dec 17
Relief Rally in Gold Mining Stocks - 16th Dec 17
Amid Bad Fundamentals, Gold Sector Rally May Have Begun - 16th Dec 17
Gold Bullish on US Fed Interest Rate Hike - 16th Dec 17
The LORAX Explains What Happened to Sheffield's Street Trees 2017 - 16th Dec 17
Bitcoin Trading Alert: Bitcoin Pauses – Will Appreciation Follow? - 16th Dec 17
SanDisk Ultra 128gb 100mbs Micro SD Card for Smartphone's Speed Test - 15th Dec 17
Inflation is Spiking Globally… Bond Bubble Bursts in 3… 2… - 15th Dec 17
Sheffield's 'Real' LORAX Defending the Trees From the Labour City Council Patrol Units - 15th Dec 17
Stock Market Decline Signals are Near - 15th Dec 17
Santa Is Putting Christmas On The Blockchain And Saving Billions - 14th Dec 17
The Unprotected, the Protected, the Vulnerably Protected Classes—Which Are You? - 14th Dec 17
Gold’s Upside Target - 14th Dec 17
Year-end US Interest Rate Hike Again Proves To Be Launchpad For Gold Price - 14th Dec 17
2 Charts That Might Define the Fed’s Jerome Powell Era - 13th Dec 17
UK Stagflation Risk As Inflation Hits 3.1% and House Prices Fall - 13th Dec 17
Stock Market Elliott Wave Forecasts - Is the World coming to the end? - 13th Dec 17
A Method Traders Can Use to Confirm an Elliott Wave Count - 13th Dec 17
Best Time / Month of Year to BUY a USED Car is DECEMBER, UK Analysis - 13th Dec 17
A Former Wall Street Veteran: Good Traders Are Born, Not Trained - 12th Dec 17
Buy Gold, Silver Time After Speculators Reduce Longs and Banks Reduce Shorts to Continue? - 12th Dec 17
Masters of Economic and Political Illusion – in Taxes, Debt, Government, and Markets - 12th Dec 17
Approved Used Land Rover Main Dealer Real Customer Buying Guide - Hunters, Chester - 12th Dec 17
Gold Price 100% Bullish Signal - 12th Dec 17
Epic Stock Market & Fixed Income Bubble Will Not End Well - 12th Dec 17
Bitcoin can be stolen. Although Can’t be hacked - 11th Dec 17
Have Stocks Reached A Permanently Rigged Plateau? - 11th Dec 17
Trying To Beat The System Is A Fatally Flawed Investment Strategy - 11th Dec 17
Is This The Beginning Of The Next Silver Rush? - 11th Dec 17
The Dow Gold Ratio - 11th Dec 17

Market Oracle FREE Newsletter

Traders Workshop

EU Officials Out Of Step With Reality, Europeans Don’t See What’s Coming at Them

Politics / US Politics Oct 09, 2017 - 05:36 PM GMT

By: John_Mauldin

Politics

BY GEORGE FRIEDMAN : Imagine the following scenario.

Texas votes to secede from the United States, sparking bitter tension between Austin and Washington. A neo-Nazi party wins seats in the California legislature.

Cook County, home to Chicago, threatens to break away from Illinois to form its own state. Worried about losing such an economically vibrant region, government officials try to prevent the election from taking place.


The federal government vows to suspend North Carolina’s voting rights in Congress simply because it didn’t approve of its behavior. It considers doing likewise for Arizona.

In such a scenario, you might conclude that something is terribly wrong with the United States.

The thing is, this is pretty much what is happening in Europe.

The European Union in Shambles

The United Kingdom has voted to leave the European Union. The negotiations over its departure are unpleasant, to put it mildly. A party, whose members are compared to neo-Nazis, has won a surprising number of seats in Germany’s parliament.

Catalonia—which is home to Barcelona, a large and economically vital city in Spain—held an independence referendum October 1, something the government in Madrid has tried to stop. And the European Commission has threatened to suspend Poland’s voting rights over actions taken by the Polish government. It has previously attacked the Hungarian government for similar reasons.

Putting Europe in Perspective

This is not meant to diminish the problems of the United States. Nor is it meant to imply that the problems of the US and Europe are alike. I simply want to put Europe in perspective.

For all its problems, the United States isn’t about to lose its second-largest economy. It isn’t revoking voting rights from state legislatures. It isn’t grappling with a legitimate secessionist movement. It doesn’t have bona fide neo-Nazis winning seats in its largest and most prosperous state.

It may be a tough time to be American, but it is an especially tough time to be European.

But as I discovered last week in Europe, this is not how European officials see the situation. They regard the problems as serious but not existential. They believe these problems can be managed and point to economic growth in several of its member states as evidence of their management.

European officials believe the secession of the second-largest economy in Europe can be handled by a reasonable accommodation. The threat to Poland is simply the attempt to rectify a problem there.

They think the rise of the racist right from street demonstrators to significant parties is unfortunate, but not symptomatic of any larger issue. That the desire of a major part of a constituent member to form a new country is a local problem that will be handled by Madrid. 

An Odd Tranquillity

At its inception, the EU may have had political ends—it bound France and Germany together to keep them from going to war. But it is fundamentally an economic organization that is built on the notion that humans are primarily economic creatures.

The political upheavals of Europe are secondary and actually irrelevant to the real issue—making money. This is why the EU measures success in economic terms.

And it’s understandable why Europe would do so.

War and politics have defined the economic fate of its nations. World War I, World War II, and the Cold War had more impact on Europe, and indeed on Europe’s economy, than purely economic forces like supply and demand.

The dangers of political violence are well understood there. If Europe can marginalize political upheaval and concentrate on prosperity, then perhaps it can at least ignore the political and military ghosts that haunt it.

In other words, it can manage political disaffection so long as it prospers.

The problem, of course, is that prosperity was imperiled in 2008. The pride Brussels has in 2% economic growth (in some countries), and its belief that the EU has turned a corner because of it, ignores nine years of economic duress.

It also ignores the political fallout of that duress. Welcome though 2% growth may be, it might be too modest for patching up the long-term political wounds inflicted by the 2008 financial crisis. 

In contrast with the Americans, who tend to overstate their problems, Europeans tend to understate theirs. It may well be that European leaders see things more clearly than I do. But I don’t think so. I see a pattern of disintegration that requires the energy generated by panic if it is to be solved. 

Grab George Friedman's Exclusive eBook, The World Explained in Maps

The World Explained in Maps reveals the panorama of geopolitical landscapes influencing today's governments and global financial systems. Don't miss this chance to prepare for the year ahead with the straight facts about every major country’s and region's current geopolitical climate. You won't find political rhetoric or media hype here.

The World Explained in Maps is an essential guide for every investor as 2017 takes shape. Get your copy now—free!

John Mauldin Archive

© 2005-2018 http://www.MarketOracle.co.uk - The Market Oracle is a FREE Daily Financial Markets Analysis & Forecasting online publication.


Post Comment

Only logged in users are allowed to post comments. Register/ Log in

Catching a Falling Financial Knife