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Will the PIGS Blow Up Europe?

Comment

Among the mega-forces moving the tectonic plates and imperiling the nation-states of the world from above and below are these:

First, ethno-nationalism, which threatens nations with secession and break-up. We see it in the Uighurs of China, the Naga of India, the Baluch of Iran and Pakistan, the Kurds of Iran, Syria, Iraq and Turkey, the Chechens of the Russian Caucasus and the Walloons of Belgium.

Second, transnationalism. This is the project of global elites who seek to reduce nations to ethno-cultural enclaves in a new world order run by these same bloodless bureaucrats whose loyalty is neither to the land nor people whence they came.

Their work in progress, the European Union, however, is imperiled.

For the EU just took a great leap forward to force Europe's most indebted nations to surrender their economic independence or be expelled from the European Monetary Union. The PIGS — Portugal, Ireland, Italy, Greece and Spain — may rebel.

Indeed, we may see cascading rebellions across Europe recalling 1848, but with a different outcome.

What brought the EU to this day of reckoning is its decision to go for a trillion-dollar bailout of Greece, Portugal and Spain rather than let them default or restructure their debts. These nations are now being directed by the EU and International Monetary Fund to slash public spending and raise taxes, though all suffer from high unemployment, with Spain's at 20 percent.

If Berlin gets its way, these nations may also be forced to submit their budgets in advance to Brussels and accept EU-dictated limits on the deficits they will be permitted to run. This would entail a sweeping surrender of sovereignty, independence and economic freedom.

Moreover, as the pain of this "rescue" is to be borne by the debtors, while the beneficiaries are the French and German banks that hold tens of billions in PIG paper, this question arises: Why should Athens make Greeks suffer and risk political ruin at the polls, rather than default and let the banks and bondholders of Europe share in the pain?

Why not quit the EMU, default, repudiate the euro, restore the drachma and devalue? That would make Greek exports more competitive and make Greece a more desirable place in which to site one's next factory. And with its currency devalued, Greece would also become a more attractive destination for Western tourists.

But a Greek default is not the only threat to the EU.

The European Central Bank has been buying Greek debt from the banks both to relieve them of the risk of a default and to restore market confidence in Greek, Portuguese and Spanish bonds. Only when such confidence returns will investors buy new debt from the Club Med countries, all of which must issue new bonds to finance deficits and roll over maturing debt.

A problem, however, has also arisen here. As the ECB is buying up the debt of the PIGS, holders of Greek, Spanish and Portuguese bonds are unloading them, getting out of Club Med paper while the getting is good.

The ECB seems to be substituting itself for the banks as the chump to be left holding the bag when the defaults begin.

The plunging euro is a sure sign the markets are coming to see that the only way the bonds of indebted European nations are going to be paid off is with a huge infusion of euros, which may end that currency's status as a reliable store of value.

However, "if the euro fails, it is not only the currency that fails," says German Chancellor Angela Merkel. "Then Europe fails. The idea of European unity fails."

Especially enraged are the Germans. To show that they were good Europeans, they gave up their beloved mark. Now, in recent elections in North-Rhine Westphalia, the Christian Democratic Union of Merkel took a thrashing, falling 10 points below the CDU's 2005 vote, and losing the upper chamber of the German parliament.

Germans may be ready to shed the sackcloth and ashes they have worn for 65 years and start looking out for Deutschland uber alles.

Given the strains on the European Monetary Union and EU, neither of which enjoys the love or loyalty that people render to the countries of their birth, the great unraveling may be about to begin. Why, after all, should the indebted nations of Europe impose suffering upon their peoples to pay off old debts now held by distant banks?

How does imposing austerity on Portugal, Spain and Greece enable them to grow their way out of indebtedness? How does it help the EU grow if a large slice of the union is forced into austerity?

And why should Germans who pay themselves modest pensions and hold off retirement put their savings at risk to bail out the Club Med?

Many have predicted that economic nationalism would one day tear apart the European Union. The hour may be at hand.

Patrick Buchanan is the author of the book "Churchill, Hitler and 'The Unnecessary War." To find out more about Patrick Buchanan, and read features by other Creators Syndicate writers and cartoonists, visit the Creators Syndicate web page at www.creators.com.

COPYRIGHT 2010 CREATORS.COM



Comments

5 Comments | Post Comment
Dear Pat,

For the record: I'm a Jew, former American, now many years living in Israel. I always read your column and mostly disagree with your views. However, I find them intellectually honest and refreshing.
Now, I note, you are being condemned by some Jewish organizations for your recent article on Supreme Court nominee Kagan. I read the article and it seems to me that accusing you of bias in this case is misplaced, and the quotations on which that charge is based are taken out of context.
Furthermore, it seems to me that these organizations, might better expend their energy in countering the policies of the Obama administration vis-a-vie Israel and its leadership.
Sincerly,
Comment: #1
Posted by: avraham
Mon May 17, 2010 11:30 PM
Europe resisted the US solution for a while. But, it eventually succumbed to the demands of the banks to bail them out. What this proves is that the banks rule in the West. This really has nothing to do with culture or ethnicity. What is happening is that governments are giving banks free money to buy their sovereign debt, allowing them to reap huge profits for as long as it takes to write off the junk they have on their books. The central banks are buying up most of the really bad junk to speed the process. This is the least observable way to force workers to pick up the tab. Eventually, government debt will choke western economies and drive western workers to the poor house, completing the decline of the West. The bankers will enjoy their retirement on the huge bonuses they will reap over the next decade.
Comment: #2
Posted by: Elwood Anderson
Tue May 18, 2010 7:57 AM
This is an insightful description of the state of the EU but the implication that Greece could continue to spend more than it earns if it left the EU or went back to having its own currency is not quite correct. If Greeks are willing to work for fewer Euros to attract investment they can do that whether or not they are paid in euros or in drachmas worth fewer Euros. Admittedly, defaulting on debt is a good deal for the debtor and a good lesson for the creditor but it does dry up credit which makes the economy anaemic.
Comment: #3
Posted by: Peter Ungar
Tue May 18, 2010 12:14 PM
---DON'T be taken in by 'Populist/Isolationist/'Conservative' PAT
He's very, very much the bogus right's frontman, apologist and blindside
for our decades long biz-nihilist sellout and suck-up to history's ---MOST---
awesomely genocidal regime -bar none! ---ACROSS the Pacific.
---Remember! ----YOU have been warned!
-AMEN-
Comment: #4
Posted by: eber hart
Wed May 19, 2010 7:20 PM
Mr. Buchanan is essentially right, as usual, but misses some important points:
1) "If Berlin gets its way, ..."
Mr. Buchanan forgets, that US troops fought two world wars in order for Berlin to get its orders from the "international" (i.e. Jewish) bankers.
2)"if the euro fails, ...Then Europe fails. The idea of European unity fails." (Merkel)
No big loss. This is "idea" is bound to fail because it is based on geography, not on affinity.
Mr. Buchanan does not comment the Merkel statement, although he has the historical background to do so:
None of the artificial European multiethnical constructs have survived. The list is long and includes the Soviet Union, Austro-Hungary, Checoslovakia, Jugoslavia ... with Belgium being next.
3) The Greek have one of the most luxurious pension systems in the world, at least in the Euro zone, and try to maintain it at the expense of their partners.
4) The Greek cheated their way into the Euro community, expecting advantages which they initially had. The current crisis is nothing but the hangover after realizing that debt has to be repaid.
5) The Germans (the people and the bankers) in their overwhelming majority were against the Greek entry into the Euro zone, knowing the Greek cheating would weaken the Euro, which it did.
Comment: #5
Posted by: Sylvie
Wed May 26, 2010 7:33 PM
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