Those who have been paying attention have known the Euro is in deep trouble, and much of it stems from the way in which is was created. Too many member states were admitted which had currency that was overvalued for the merger, and they’ve done nothing to curb ridiculous fiscal policies in those countries. This includes nations such as Greece, Italy, Portugal, Spain, but also to a lesser degree, France. Now, it’s time to pay the piper, and predictably, nobody wants to do so. Governments in Europe are now forced to consider what will happen if the Euro falls and the member states wind up reverting to their prior forms of currency. Some estimates suggest that GDP would decline in Europe among member states by as much as half, or more, and that widespread unemployment on a scale that would dwarf any previous depressions in scale and depth. In short, they’re now planning for a calamity, complete with riots and revolutions, and the reason is simple: It’s now a very real possibility. From a story in the UK Telegraph:
The Financial Services Authority this week issued a public warning to British banks to bolster their contingency plans for the break-up of the single currency.
Some economists believe that at worst, the outright collapse of the euro could reduce GDP in its member-states by up to half and trigger mass unemployment.
Analysts at UBS, an investment bank earlier this year warned that the most extreme consequences of a break-up include risks to basic property rights and the threat of civil disorder.
“When the unemployment consequences are factored in, it is virtually impossible to consider a break-up scenario without some serious social consequences,” UBS said.
Of course, many Americans are not moved by these tidings, somehow believing that we are insulated from a European crisis, but nothing could be further from the truth. If such drastic circumstances arise in Europe, the effects will be global, and so will be the civil unrest that accompanies it. This is the kind of calamity from which there is virtually no escape, anywhere on Earth. In such an environment, not only would our own exports to Europe would collapse, but also we would find our own currency in free-fall because we have so thoroughly tied it to the Euro. The defaults alone would wreck our own currency, and leave the United States in a similar situation.
Reuters is now carrying a story about the French and German effort to establish some fiscal controls to stave off a calamity, but the truth is that this will likely be too little, too late. Some authorities realize that this will be a stalling tactic at best, and are using the time it may buy to prepare for what is increasingly being seen as an inevitable collapse. From the Telegraph:
A senior minister has now revealed the extent of the Government’s concern, saying that Britain is now planning on the basis that a euro collapse is now just a matter of time.
“It’s in our interests that they keep playing for time because that gives us more time to prepare,” the minister told the Daily Telegraph.
Recent Foreign and Commonwealth Office instructions to embassies and consulates request contingency planning for extreme scenarios including rioting and social unrest.
As is now obvious, this is all a play for time. They’re buying time, but they’re not going to save things, and the Europeans seem to know it. The question thus becomes: What is our own government doing to prepare? What are they telling you to do in preparation? Nothing. Your own federal government is behaving irresponsibly in the face of this looming crisis.
For three years or more, the hand-writing has been on the wall, and our own government has obfuscated and lied about the direction of things, but has done little to prepare the American people for the possibilities now in the offing. Let me suggest to you that the recent sporadic reports of spikes in the purchase of survival supplies is an indicator that the American people have begun to figure it out without governmental warnings. No rational person can examine what’s been happening on the global economic and financial front and not have some sense of the very real dangers now accumulating. It remains a prudent course of action for Americans to prepare for any sort of emergency, but with the real possibility of complete Euro-zone collapse now seemingly imminent, prudence would dictate an uptick in preparedness planning. Our own currency has been tied too closely to the Euro currency to avoid the consequences of its collapse.