The War in Europe

Posted: Nov 30, 2011 12:01 AM

Lately, because of the debt crisis in Europe a lot of people are speculating that if we don’t save the Euro, the Europeans will go to war. The concept makes great headlines and sells newspapers. The idea of the Europeans devolving into war like states also injects a little fear for motivation into policy makers and the general public. The idea that if we don’t save the Euro tanks will start rolling over borders conjures up images of the German invasion of the Sudetenland in 1939.

People in political power often use fear as a stick to get what they want. People with motivation to affect one outcome or another will almost always try to terrify the general public to get what they want. Just look at the evolution of the global warming fiasco.

There is no doubt that there will be gigantic pain in Euroland. There is going to be gigantic pain whether they save the European Union or not. But, I think a country vs country war similar to WW1 or WW2 is way overblown.

The big problem in Europe isn’t trade deficits and who has what. The big problem is that no country in Europe is poised for growth. Their bureaucracies and social safety net are so large and unmanageable they can’t grow. Their rules and regulations are so arcane and intense that companies figure out other things to do with their capital than spend them at home. How the heck can you grow an economy with so many artificial impediments in the way?

Certainly, there will be a lot of strikes and riots. Political leaders might get killed, revolutions might happen. Angry Greeks might blame Germany for their home grown problems. But does anyone seriously think the Greeks can attack anyone? Italy? The last time France attacked anything it was a plate of food or a vineyard. Certainly, the Germans aren’t going to roll an Army across the border. Very few armies in Europe are equipped to do much. They have outsourced national defense to the United States.

Even if a crazed person from one country did something to a leader of another country, I don’t think a war would start like it did in 1914. The European populace doesn’t have the stomach for war. They dealt with them in the 1800's and 1900's. The scars are visible, and the memories still fresh enough that they will scream, yell and argue. But to load their weapons and fight? Highly improbable.

The Euro was doomed from the beginning. It is just now that the Europeans have come to the stark realization that it might be cheaper to break the whole thing up than hold it together. The market is going to force hard punishments on the profligate spending by unchecked governments. Even if the Euro doesn’t break up and is saved, they will be left with two choices; grow or inflate.

They can’t grow.