My first thought, back when they announced that the EU was moving toward a single currency, was -- wait a minute, are you telling me that all these sober, level-headed, thrifty Nordic types in Northern Europe are going to cast their lot, currency-wise, with all those laid back party animals in the south? Sounds kind of like opening a joint bank account (with right of survivorship) with your ne'er-do-well, drunken brother-in-law. And yet, inexplicably, that is precisely what happened, and the inevitable denouement has... well, “denouemented”, or whatever the term is. The guilty parties – at least, the first wave of guilty parties, 'cause we know what happens in a welfare state, sooner or later everybody winds up on welfare – are being referred to as the PIGS, which stands for Portugal, Ireland, Greece, and Spain. And sho' nuff, 3 of the 4 are Mediterranean countries with histories of insolvency and misgovernance that go back decades... and then there's Ireland, which is in a category all its own in this as with everything else.
So what have these warm, sunny, cheerful (again, with the exception of Ireland) places done that have brought things to this point? Why, they have done the same thing that many other places have done down throughout history – spent more than they had, and promised to spend even more than that. The difference – as with American banks and businesses in our time – is that they have done so with the comforting thought that they would be “bailed out” in the event things went badly, because they were a valued part of something larger. And the thing that always amazes me about situations like this – and I admit to not understanding it – is the amount of leverage the small, failed entity seems to have over the larger, not-yet-failed entity that it is a part of. It's a kind of twisted version of David and Goliath, but with finance. Why should the collapse of the Greek economy have as much of a ripple effect throughout the EU (and beyond) as everyone fears? But then, why should the collapse of an American automaker, or bank, or stock brokerage, have as much of a ripple effect through the U.S. as everyone claims (and uses to justify bailouts)? I think there is a lot that no one's telling us about the so-called “global economy” -- but I also think that much of this panic is over-dramatization with a political agenda. It's not so different, really, from all the “domino effect” arguments during the Cold War, many (if not all) of which turned out to be made up out of whole cloth. In fact, almost any sort of propaganda designed to make people panic and turn all of their freedoms over to government should be met with utter skepticism... and yet people are living in a state of perpetual fear, and all it takes is one small jolt to set off another round of rushing to our leaders, crying “Help us! Save us! Protect us! We'll do anything you say!” Thus – mission accomplished, once again, for the Regime.
It is a bit intriguing, in any case, to see the EU as a “distant mirror” for what will surely become our fate in short order. We have bankrupt cities (Pittsburgh being prominent among them)... bankrupt counties... bankrupt states... bankrupt just about everything, in fact, in the public sector, from the largest to the smallest... and they all expect salvation, and bailouts, from the federal government, which is, in fact, more bankrupt than they, except that it can print more money and they can't. If you're the only guy in a downtrodden mining town with a credit card, you can pretend, for a while, that you're the cock of the walk – but you may, in fact, wind up worse off than your neighbors.
So it's going to be very interesting to see what the cooler heads among the EU members decide to do about those other guys. They might, in fact, wind up asking themselves why they even admitted these clowns to the EU to begin with, knowing full well that they would eventually turn into PIGS.