From yesterday’s WSJ, some words of not entirely good cheer from Bret Stephens:
What is now happening in Europe isn’t so much a crisis as it is an exposure: a Madoff-type event rather than a Lehman one. The shock is that it’s a shock. Greece was never going to be bailed out and will, sooner or later, default. The banks holding Greek debt will, sooner or later, be recapitalized. The recapitalization will be borne by German taxpayers, and it will bring them—sooner rather than later—to the outer limit of their forbearance. The Chinese will not ride to the rescue: They know not to throw good money after bad.
And then Italy will go Greek. Europe’s crisis will lap on U.S. shores, and America’s economic woes will lap on Europe’s—a two-way tsunami.
America will survive this because America is a state. But as Bismarck once remarked, “Whoever speaks of Europe is wrong. Europe is a geographical expression.” The “fiscal union” that’s being mooted will never come to pass: German voters won’t stand for it, and neither will any other country that wants to retain fiscal independence—which is to say, the core attribute of democratic sovereignty.
What comes next is the explosion of the European project. Given what European leaders have made of that project over the past 30-odd years, it’s not an altogether bad thing. But it will come at a massive cost. The riots of Athens will become those of Milan, Madrid and Marseilles. Parties of the fringe will gain greater sway. Border checkpoints will return. Currencies will be resurrected, then devalued. Countries will choose decay over reform. It’s a long, likely parade of horribles.
“Possible,” I would say, rather than “likely” (I’m far from convinced that the Eurozone’s troubles will bring the EU itself crashing down), and it begs another question. Maintaining the Eurozone (as it now is) will almost certainly doom a large swath of its periphery to stagnation. That is hardly the best guarantee of social peace.
It’s also worth noting this section:
The hardest fact on which postwar Europe was founded was military necessity, crisply summed up by Lord Ismay’s famous line that NATO’s mission was “to keep the Russians out, the Americans in, and the Germans down.” The next hard fact was hard money, the gift of Ludwig Erhard, author of the economic reforms that created the Deutsche mark, abolished price controls, and put inflation in check for generations. The third hard fact was the creation of Jean Monnet’s common market that gave Europe a shared economic—not political—identity. The result was the Wirtschaftswunder in Germany, Les Trente Glorieuses in France and il miracolo economico in Italy. It could have lasted into the present day. It didn’t.
That conflates too much. Military necessity and Ludwig Erhard deserve the credit that Stephens gives them, “Jean Monnet’s comon market” not so much. The proto-EU, which began with the European Coal and Steel Community in 1951 established by Germany, France, Italy, and the Benelux, was a reflection of the desire of those countries to avoid fighting each other yet again, but that shared intention mattered far more than its institutional expression. I doubt if the Coal and Steel Community and the later (1957) European Economic Community formed by the same six countries had that much to do with the spectacular revival enjoyed by Western Europe’s economies in the post-war years.