Tag Archives: François Hollande

WHITHER EUROPE? PAIN TODAY OR GREATER PAIN TOMORROW

You can’t cure an alcoholic.  It is something an alcoholic has to do himself.  First he must recognize the problem; then he must be willing to endure the cure.  Europe isn’t there yet on either count.

France has just chosen to go full bore Socialist, riots continue in Greece as the Neo-Nazis gain political favor and German voters are prepped to depose Angela Merkel.  The nanny states with their unsustainable level of benefits are running out of money and the children are shouting like bloody murder for the continuation of their luxury.  Reality is unacceptable so they are voting for promises.  Apparently the pain has to get worse before Europe will be willing to suffer through the cure.

Some argue that the way out is to spend more to rev up the engine of government income which, of course, is greater tax revenue.  The argument to spend more is based on the assumption that the problem is an economic recession.  That’s understandable but this time it’s a false premise.  The problem is not just another recession.  The European private sector is not robust but it’s healthy.  It’s only sovereign nations that are bankrupt.  The wealth of a nation is derived from two sources, private assets and income that can be taxed and to a much lesser extent its mineral rights.  Taken together the wealth is large but government’s capacity to spend is even larger.  When nations face insolvency during a more or less normal economic sector down cycle, the problem is overspending, not the economy.