Utopia Lost?: European Dream is Over Without Greater
Federalism (DiarioEconomico)
“The Germans,
still traumatized by the hyperinflation that brought Hitler to power, won’t allow
for additional inflation. … Will people and politicians leave their existing
trenches and follow a common path? Or will the European Union fail to amount to
anything more than a utopia? At this point there are more doubts than certainties.”
President Obama and German Chancellor Merkel walk at the G8 summit, May 19. Presumably, they were not discussing the relative virtues of austerity and stimulus. i.e.: 'growth.' Is Germany obsessed with avoiding the hyperinflation that led to Hitler?
The high point of the last G8 meeting was when no one did
anything. The summit ended with Obama, Merkel and company watching the Champions
League final.
With Europe on a knife’s edge, which has consequences for
the entire global economy, the outcome of the meeting of the richest countries in the
world was a vacuum. It is nothing but a list of each member’s convictions: the
U.S. wants more economic growth, Germany wants more austerity, France prefers “Eurobonds” and England doesn’t want
anything. When politicians are weak and live only for their domestic agendas,
it is hard to make progress.
The European
Union lives in imminent danger of implosion. A policy of fiscal consolidation
without monetary compensation condemns countries to recession and unemployment,
which is precisely what is happening. Huge doses of fiscal
austerity and monetary policies to correct the Keynesian delusions of the past have
worsened the disaster, with the European Central Bank clinging to an inflation
target of two percent. It is just one more imposition of German orthodoxy on
Europe.
At this point, in which fiscal policy cannot be used to
promote economic growth, the ECB should be taking
measures to pull Europe out of the recession by copying the U.S. Federal
Reserve. In other words, they should push the button and print euros, passing more funds on to banks in order to promote
economic activity. And, for some time, the inflation target of reference should
be 4 percent. Exceptional times call for exceptional measures.
But there will be none of that. The Germans, still
traumatized by the hyperinflation that brought Hitler to power, won’t allow for
these types of solutions. Thus, they prefer to condemn Europe to the
impoverishment that is leading precisely to the rebirth of extremist forces in a
number of countries. The elections in France and Greece are just the latest
examples.
The European Union is not endangered by the economic crisis.
In the past there have been several and all were overcome. But Europe may not
survive the political and social crisis that is putting into question its
traditional values of democracy, tolerance, development and solidarity. Greece’s
possible exit from the euro has a symbolic value that goes beyond economic issues.
It shows that there are at least two Europes, and
that the one in the north thinks its morals are superior to those in the Mediterranean
countries.
Posted by Worldmeets.US
The solution to this crisis is greater federalism, with
stronger and more united European institutions. But will people and politicians
leave their existing trenches and follow a common path? Or will the European
Union fail to amount to anything more than a utopia? At this point there are more
doubts than certainties
*Bruno
Proença is executive director of Diario Economico
