The West finds itself in a financial tailspin. The US problem looks less ominous in the long run, because it is of a techno-political nature and structural mismanagement which can be corrected. Europe’s troubles are far more serious, bringing into mind Ponzi schemes or John Law’s (father of the paper money) Mississippi debacle, which ruined the France of Louis XV.
The Greek “comedy of errors” remains a brushfire which can only be stopped by a second fire and isolated by a scorched earth intervention. Instead euro zone leaders continue to empty buckets of water on what has become hell. Meanwhile, it is pathetic to see how mediocre actors try to untangle themselves from so many lies, manipulative interventions and intellectual dishonesty. The crisis is serious in itself, but the unwillingness to tackle the consequences thereof as a structural rather than as a cyclical problem is hard to believe. There are technical problems for sure but the big elephant in the room is ignored. The ECB is a flawed construction which has an unsubstantial grip on the economic policies of the euro members. Besides, too many men and women in charge fight more for their fief than for the common good.
The EU made a historical mistake in enlarging without paying due attention to individual conditions. It is hard to believe that EU leaders could ever have imagined that passing the torch of the original Six would be that simple. The euro suffers from identical delusions. While the original idea boosted, rightly so, the morale and the ambitions, the house buyer found all too soon out that the electricity connections were faulty. In the USA, the Lehman debacle, the national debt, the problem of the housing sector, are serious but Treasury and the Fed are still able to contain to a point panicky reactions. The ECB, on the contrary, is perceived as a paper tiger. Even the BRICs start to have second thoughts about Europe’s financial woes and defense mechanisms.
I believe that sooner rather than later the EU will have to face the music and revise the modus operandi, if it wants to regain credibility both with Wall Street and Main Street. The euro-zone mechanisms must simultaneously be reinforced and rendered more flexible so that temporary “opt outs” can be foreseen and a linkage with the IMF better codified. Drama or comedy (Berlusconi regnante), with all the social, political unwelcome disturbances, should have no place in transparent rules. The ECB does not have the means to play lifeguard for the amateur swimmers whom we saw drowning in some giant wave of lies, fabricated ciphers and unconvincing stress tests. The ECB should have the means to play a more independent, intrusive role rather than being taken hostage by the Franco-German ménage de raison, floating rules made to limit budget deficits. The Commission and the President of the Council must likewise do battle for their respective territorial control if they do not want to become irrelevant.
It was a nice utopia to imagine that an enlarged Europe would slowly come together with compatible and comparative equal partners. The idea was generous then, naïf today. After the fall of the Berlin Wall it would have been suicidal not to let in countries who suffered for so long in the Soviet macro-Goulag. Today we are paying a high price for having let in countries that remain absolutely unprepared. Tomorrow we will have to speak more clearly about the Turkish question, which comes with heavy political luggage. The same goes for Serbia, which surely will awaken Kosovo and Albania.
The Treaty of Rome is no more. Pretending to the contrary shows a lack of imagination. Fukuyama had the intellectual guts to revise his The End of History. The EU should likewise consider the benefits of an added fiscal union and admit that the “six-seater” of earlier (good) days does not accommodate the number of new and future hikers who intend to climb on board. Why not make it simple? Create an EU with several sections, depending on the entrance fee and the willingness to occupy the seats near the emergency exit in case of controlled-default pressure. The future European Stability Mechanism will be required to distinguish insolvent from illiquid governments before deciding to give a loan. One step in the right direction perhaps. L’Europe vaut bien une mess! In the current emergency circumstances, the debate over a federal or inter-governmental EU is for theologians not for healers.
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