EU Is Not the United States of Europe

Posted Mar 18th 2010 12:00PM by Sheldon Liber
Filed under: International Markets, Rants and Raves, Politics, Currency

California has a huge deficit and will not be going to the International Monetary Fund (IMF) for financial assistance. This is true of a dozen other states as well.

The European Union, which was established to compete with the economic clout of the United States, is looking like the European Dis-Union (EDU) -- currently "dissing" on the state of Greece. This EDU is a far cry from the good 'ol USA, which has plenty of economic and social strife of its own, but even under the most stressful times has demonstrated it takes care of its own.

Asian and European markets have sagged Thursday as the patchwork quilt of Europe is still fragile, and the current remarks coming out of Germany are evidence that it may have been assembled with cheap thread. From Bloomberg:

Greece should turn to the International Monetary Fund if it needs aid, the chief finance spokesman for German Chancellor Angela Merkel's party said, in a reversal that signals a rift with European leaders Jean-Claude Trichet, Jean-Claude Juncker and Nicolas Sarkozy.

"We have to think about who has the instruments to push for Greece to restore its capital-markets access" if ultimately needed, Michael Meister, a lawmaker with Merkel's Christian Democratic Union, said in an interview in Berlin. "Nobody apart from the IMF has these instruments." Attempting a Greek rescue without the IMF "would be a very daring experiment."

There is no debate that Greece has mismanaged its economic affairs, but the disingenuous attempt by EU member nations to come to terms with the fact that not aiding one of their members makes the EU look like it's a continent-wide and a drachma deep.

Only a few months ago there was talk of replacing or pairing the U.S. dollar as the dominant currency of international trade with the Euro or a basket of currencies. Those voices seem to have been silenced, or at least blocked out, by the shrill voices in the midst of the current European economic disunion.

Sheldon Liber is the CEO of a small private investment company and the principal for design and research at an architecture and planning firm. He writes the columns Chasing Value and Serious Money.

Tags: common currency, EU, euro, european union, featured, Greek economy, IMF, international monetary fund, USA

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Reader Comments (Page 1 of 1)

3-18-2010 @ 1:22PM

danastas2000 said...

Good article. You're exactly right.

Germany was bailed out by the USA in the Mashall Plan, it received $50 billion in today's dollars, bailing it out from its tendency to cause harm to others (to put it mildly). And it rebounded nicely, and we know why: the Nazis left behind a huge industrial base. But that's past history and the Germans do themselves no favor by recalling WW2 and their moral rectitude in that era.

I'm more concerned that Germany accepted $20 billion in US taxpayer bail out money for the reckless and amoral gambling bets made by German bankers last year, including the state-owned KfW bank, the infamous bank that gave Lehman Bros. $300 million an hour before Lehman collapsed. The US taxpayer came to the resuce of the German taxpayer.

Now we're seeing German hypocrisy: no bailouts.