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Europe: A Union Endangered

Will Europe pull together or come apart? We’ll look at stakes and consequences.

A man passes close to a stock exchange board monitor inside a bank in Milan, Italy.  Worries that Europe's debt crisis will spread to Italy and Spain weighed on markets . (AP)

A man passes close to a stock exchange board monitor inside a bank in Milan, Italy. Worries that Europe's debt crisis will spread to Italy and Spain weighed on markets . (AP)

Everybody’s trying to figure out how to save their economy. The wild card in the deck right now is Europe. Just how wild is the question.

Part of it is about dreams. The dream of European union – which we’d come to see as settled fact – is back on the table. Part of it is about culture and politics. Can you put Germans and Greeks in the same pot and keep them there forever? Part of it is about fear of calamity. If Europe can’t find its fiscal footing, will it take down world banks, world markets, the struggling US economy?

This hour On Point: the trouble with Europe.

-Tom Ashbrook

Guests

Nicholas Kulish, Berlin bureau chief for the New York Times.

Jan Randolph, Director of Sovereign Risk, for the international consultancy IHS Global Insight.

Scheherazade Rehman, is Director of the European Union Research Center and a professor of International Finance and Business at George Washington University.

From Tom’s Reading List

The Wall Street Journal “The world’s leading central banks joined forces to offer Europe’s beleaguered banks easy access to dollars Thursday, acting to quell fears that the region’s lenders could fall victim to the euro-zone’s government debt crisis.”

Financial Times “Yet even if the European Union and International Monetary Fund pay up as expected, the funds may still not be enough to keep the country afloat.”

Associated Press “German Chancellor Angela Merkel says that “if the euro fails, Europe fails.” But as the debt crisis intensifies, the leader of Europe’s biggest economy is sticking to a course of gradual action that markets are losing faith in and refuses to take the radical measures some say are needed to keep the currency afloat.”

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  • NotOnPoint

    Tom Ashbrook –

    What a poor reading list. 

    I’m beginning to think your producers don’t prep you properly on purpose. 

    Maybe that’s why your interview questions often seem sophomoric and lack specifics.

    Or, have you and your show become a shill for the status quo? 

    Why didn’t your producers schedule someone like Nouriel Roubini.  At least, he might have an oppossing viewpoint and be
    knowledgable enough to ask a few incisive questions.

    Anyway, I’m guessing the selection of your guests today will tow the IMF’s/Eurozone’s Central Bank’s party-line and we will probably be no better informed after the hour.

    Looking forward to learning more from your listeners’ postings in the ‘Comments’ section.  

    • Anonymous

      Maybe not so much the style of your complaint…  but its substance is exactly on target. 

  • JustSayin

    Unions that live in glass houses, shouldn’t throw stones.

    • Yar

      I thought it was unions that live in grass houses should not stow thrones.  For far too long, the prosperity of the first world has been built on the labor of the third.   The world is fundamentally different, and many in the first world will have to go to work, doing something other than moving numbers on a computer screen.

      • JustSayin

        I agree with that…and I think many American workers agree with that as well. In yet another example of excessive outsourcing of American jobs is the D.r Oz fuss about toxic apple juice in America being imported from China.

        Whatever is preventing America from squeezing and packaging it’s own apples… and NOT adding Arsenic… needs to be fixed.

        I have come to believe that its not labor costs, but the excess of lawyers in the US that is the impetus for outsourcing.

        • Brett

          I heard a story about that on NPR just this morning…we should NOT be importing goods from other countries that don’t comply with the same environmental and safety standards as the goods that we export! 

        • BHA in Vermont

          The impetus is the grotesque compensation CEOs and other execs get by eliminating jobs via outsourcing.

        • Anonymous

          ” I have come to believe that its not labor costs, but the excess of lawyers in the US that is the impetus for outsourcing.”

          This I gotta hear.  Please expand on this theory. 

      • steve

        minions, given freedom, should not allow thrones (or bow to pincipalities)

  • Cooley

    EU is one, but it is a privilege to belong and if a country doesn’t hold up to their responsibilities they don’t belong. And that is just not financial. Austria’s Fekter behavior also is not that countries first strike.

  • Anonymous

    How can you have a monetary union without a strong political union. A strong political union, by definition, means that the stronger components have to be willing to sacrifice to help weaker components of the union. European member nations are still too tribal to make the sacrifice.

    • BHA in Vermont

      Same applies in the USA. Those with the money feel no moral mandate to help those without even though the money the rich have comes from those with much less.

      McConnell and Boehner loudly saying “no tax increase on those with great wealth”. Can’t let the GWB tax cuts sunset even though the ‘no tax’ Republicans originally set an expiration date of 2 years ago.

      What is wrong with letting them expire AS PLANNED and AGREED 10 years ago? Cutting taxes and starting 2 wars was wrong in the first place.

      Have all these rich people spell out EXACTLY
      - which jobs they will CREATE if they don’t pay more taxes.
      - which jobs they will KILL if they DO have to pay more taxes.

      Any individual who ACTUALLY CREATES jobs will have a blank sheet of paper in answer to both questions. They aren’t creating jobs NOW, why will they create them if their taxes DON’T go up?

      Jobs are related to SALES, not taxes. Unless their tax rate goes down so far that they can substantially decrease the price of their product AND sell more of it with MORE profit than the ‘pre low/no taxes’ sales such that they NEED more workers they will only pocket the money and the national debt goes even higher. Those individuals that MIGHT create more jobs if taxes were lower (and I have my doubts ANY exist) are already making more money than they can spend. What is the incentive to grow the business when they can make more simply by pocketing the ‘saved’ taxes?

      • Dave in CT

        “Those with the money feel no moral mandate to help those without even though the money the rich have comes from those with much less. ”

        That’s the easy characterization.  At best its only partly true. Unless you are talking about bankers, wall st. and debt, then, yes, you are completely right.

        If I go out and dig up my yard, plant some crops, take care of them, and sell them, and save the money over time, leading to some savings one day (tough example of course), how has my money come from those with much less?  You mean those who couldn’t be bothered to pick up the shovel, or learn how to raise a crop?

        The economy is not a zero-sum game. Ideas, effort and initiative create actual value.  And those who do that, do not necessarily owe anything to anyone, unless they choose to share the fruits of their labor.

        I’m not advocating no taxes, no common contributions/common infrastructures whatever, but you get my point.

        The zero-sum game presumption that posits that everyone with money stole it from someone else, is nonsense that should not be used to govern our country, IMO.

        • Dave in CT

          PS, I’m for a millionare’s tax, but would like the money rebated back to the rest of individuals, not put into expansion of government.

          • Dave in CT

            And CLEARLY, I’ve long been for holding the Banking/Government/Wall St. swindlers who manufactured our financial crisis accountable, including clawback of personal fortunes.

  • Brandstad

    I think it was clear to all economists that the current structure of the EU was destined to fail since the union bands the countries together in a fashion that doesn’t also tie together the individual countries taxation and spending.  I personally believe that the current EU structure was always intended to be transient and the end goal was a United States of Europe like structure.

  • wauch

    Couldn’t the same title of this show apply to the US?

    • BHA in Vermont

      Yes.

  • Cory

    The developed world is being devoured by the 3rd/developing world.  This is part of it.  Folks at the top have sold the middle and working classes down the river.  Good jobs with good benefits are a thing of the past for most.  It’ll be fun watching Europe during this time, because unlike us they won’t take it sitting down.  French farmers dumping produce in the streets and Brits doing the old smash and grab…  On this side of the pond we are more likely to have occasional deluded lone gunmen.  So sad.

    My advice to Europe is to find a way to hang together.  We will all soon learn that we need each other on the micro and macro scale.  Oh, and get away from materialism.  That’s just gonna make you miserable in the brave new world.

    • Dave in CT

      For crying out loud, this isn’t about “togetherness”.  The togetherness was all part of the global financial elite plan, and its blowing up in our face, and they are trying to save themselves on the backs of the people.

      Yes, people should “hang together”, but hang together protecting the concepts of distributed power, liberty, and taking the reigns away from the centralized banking/finance elite.

      If we keep giving up our power to a centralized group, what on earth do you expect?!

      This is a mean, nasty world. Power corrupts.  While there are sacrifices made for the benefits of liberty, like perhaps less “efficiency” of many people working independently, maybe reinventing the wheel here and there, it is vastly preferable to the prospect of tyranny, especially Global Tyranny, which we appear to be suffering now, at the UNACCOUNTABLE hands of the financial elite working with governments!

      Progressive sense of fairness and justice is very close to the goals of those who see liberty as the means to the same ends. With Liberty principles however, you remove the corrupted, large centralized planners as the utopian beneficial dictators, and we DEMAND MORE OF OURSELVES.

      • Cory

        I agree with all you’ve said.

  • AC

    another economics show, wish i’d payed more attention in those classes!! and now to show how little i know:
    I thought the euro was decided to increase their bulk purchasing power – not redefine the nations or their ethnicities themselves. It is only a monetary partnership.
    Shouldn’t they hold strong and meet any contracts or obligations already decided upon?
    That being said, if it were to disband, what sorts of re-establishing period would be required to return to their previous monetary systems? I’m assuming they’ve kept tract of their own GDPs?

    • Dave in CT

      International Bankers and all their financial market enablers make easy money by controlling and manipulating currencies and the “business cycle”.  

      It’s easy money, and who wouldn’t want to receive perpetual debt payments for doing nothing, once you can wrest peoples sovereignty, liberty and power from them.

      Its been going on for centuries.

  • Vcrawley

    It’s going to fail because you can’t get that many country’s. To work as a unit.

  • Dave in CT

    Geithner helping to bail out European Banks….

    Bailout 2.0

    Are you kidding me?

    All together now…

    Let them fail! Down with the banks! Let them fail! Down with the banks!

    Let them fail! Down with the banks! Let them fail! Down with the banks!

    Let them fail! Down with the banks! Let them fail! Down with the banks!

    Let them fail! Down with the banks! Let them fail! Down with the banks!

  • Dave in CT

    Surprise! People don’t like being put in a pot!

    Bribes by promise of an economic candyland worked for a while, but liberty will win over banking interests.

    These Utopian Central Planner/Bankers have screwed up the whole world, and People globally are not going to swallow it much longer.

  • Dave in CT

    Are we going to listen and bend over to all the fear of contagion and financial armageddon talk again, or are we going wise up and accept some failures in the manipulated financial/speculative world and rebuild organically from the ground up?

    Not in the interest of bankers of course, so put your gloves on….

    • Rational

      That old euphemism is back: “Recapitalization of the banks”

      Definition: Replace funds stolen by investment bankers on the backs of taxpayers without financial reforms, when complete…steal it again.

  • Dave in CT

    Greeks back to dark ages?  How did they manage to exist for all these centuries until the recent blink of an eye EU experiment?

    So arrogant.  Yes they need to re-examine their actual economic practices and social contracts and work models etc, but to make the argument that its One-World or bust, is nonsense IMO.

  • Dave in CT

    Stop worrying about financial market “investors” in your central planning experiment, and let people worry about how to grow food and make shelters etc etc. REAL ECONOMICS

    No such thing as a free lunch.

    Unless of course you are an international banker looking for debt payments in perpetuity by suckering in the world to believing it’s credit card or bust.

    Debt and fancy finance is not a magic wand, creating something from nothing. Its a calculated swindle.

    If you want growth, grow food, not debt.

    • Rational

      But Dave GWB stated we were all going to get rich by selling services to each other forever. Manufacturing things is still considered as the path to fiscal ruin in the US.

      …Of course you have to blind yourself to history and that giant creditor nation that does manufacturing. Dare I speak treason and say China has income because it actually makes things…

      • Dave in CT

        Who’s listening to GWB? Who’s arguing against manufacturing? Not me.

        • Rational

          Oh Dave, calm down. I was being sarcastic, and I agree with your point.

          • Dave in CT

            Sorry, i do get riled up…. :)

  • Joe in MA

    If Germany opens its wallet and agrees to keep helping Greece to avoid default isn’t there a danger that, in the not too distant future, Germany could itself wind up in a situation where it’s borrowing rate goes up?  It’s not like Germany’s economy is exactly booming.

    • Dave in CT

      Oh poppycock! There is always someone else to give a bailout! What do you think this is, a finite earth operating within the constraints of scarcity??

  • Anonymous

    The “growth” economy itself is not real — The Limits of Growth study was correct.  The sooner we all realize this, the better.

    We simple must switch our thinking to a Steady State Economy.  Resources are by definition limited; and infinite growth was a fantasy.

    Neil

  • Dave in CT

    Who is the caller to state that Germany “owes” anyone anything.

    Why oh why does everyone think there is some 3rd party that can swoop in and save the day with magical bags of money or resources, let alone DEMAND it be done!

    FREE LUNCH NOW! FREE LUNCH NOW!

    We have overpopulate the world, and over complicated our lives, and we are suffering and now grasping at straws. Other people’s straws.

    • http://www.facebook.com/profile.php?id=1251882786 Michael Hüby

      hear hear!

  • BHA in Vermont

    The Greeks are low on the list of percentage of taxes owed actually being paid. I don’t think the citizens of Germany should have to cover the tax cheats in Greece. And I don’t think the any country should be beholden for past events to another for all of eternity.

  • http://www.facebook.com/profile.php?id=1251882786 Michael Hüby

    I was baffled by the ignorance of the caller talking about Germany owing Greece. Germany is the single biggest payer into this money sink EU, had to shouilder the reunification, which added 17 million people to the entitlement programs(!), AND STILL paid most into the EU.
    What did Greece, Italy, Spain contribute to the EU? Nil but racking up debt.
    Get educated and off that war winner horse!

  • Dave in CT

    Time to stop saying, “they borrowed too much” and admit, “they were lent too much”, by interest loving bankers and the financial elite who make trading fees and insider gains, playing in their sandbox.

    Can we get real?

    • Rational

      Good point.

  • Dave in CT

    Win/Win

    Free/Lunch

    B/S

  • Dave in CT

    All move on….. nothing to see here……  no engineered bubble/bust…. no bailouts of bankers on backs of people……
    All move on…..

  • Cheryl in Virginia

    Does the Federal Reserve have the authority to loan another country/country’s bank money without getting permission from Congress?  Seems like another bank bailout that the US Citizens are fed up with doing.  Let’s fix home, let Europe fix Europe!!

    • Dave in CT

      Ha!   The Federal Reserve can do whatever it wants! We don’t even know the identity of the private banks that make up the Federal Reserve! We are not allowed, and they are unaccountable.

      Get to know the history of the Fed.

      http://video.google.com/videoplay?docid=6507136891691870450&hl=en

      • Cheryl in Virginia

        We are swirling in the bowl and no one is paying attention.

        • Dave in CT

          Nothing to see here, move along everyone, nothing to see.

    • Rational

      I agree.

      The one guest stated we are all tied together now slogging up a mountain of debt.. We the people did not tie us together…the ‘investment’ bankers did that, and the bankers created the debt.

      In reality we the people are not on that rope, we are the rope.

      • Dave in CT

        Nice, we are the rope. A little individualism, self-sufficiency, personal responsibility, should help dissolve that, if we think we can handle it.

        What is the glue that holds the rope together?

        I say, the narrative of lies by the financial ruling elite mixed with utopian hopes for a centralized answer to the challenges of scarcity/humanity.

  • PI Resident

    The IMF and US money:
    A end of show called made the point that the IMF receives about 22% of its funds from the US – that means US taxpayers.   So no the US citizens will be asked to bail out Europe’s banks!
    Too bad there was not much time for discussion.

    • Dave in CT

      Yes, but didn’t you vote for your IMF officials? Aren’t they just doing what you want, as your representative?

      • Dave in CT

        Do people realize what huge financial actions are taken, that impact our future as a people more than probably any other thing, with absolutely No Accountability?  The Fed, IMF…. Are you kidding?

        Oh, trust them, they know what they are doing, of course its all in our best interest. I’ll shut up and go back to stamping widge…. oops, they sent that to China.

    • Rational

      It much much worse than that. We borrow that money from China, then give it to the IMF.

  • David Paine

    As the picture boy of the disappearing “middle class”, (white mid 50′s high school graduate, cabinet maker) it is easy to say to European banks and the IMF, “let them fail”.  The challenge before our government, our journalists is to overcome this knee jerk reaction to our own troubles and show us the enlightened self interest of supporting the Euro.

  • http://gregorycamp.wordpress.com/ Greg Camp

    Europe today is like the United States during the period of the Articles of Confederation, and it faces a choice:  Split back into independent countries or become a United States of Europe.

  • MyWayOrTheHighway

    Dave in CT – Randolph’s response to your ‘let them fail, down with banks’ comment was interrupted by NPR.   How ironic or intentional was that?
    Kudos to Tom for bringing it up though.

    • Dave in CT

      Really? I missed it. Recall the time? Will try to listen again later…

      • MyWayOrTheHighway

        It was in the last couple of minutes – right near the end of the program before NPR cut in to promo the ‘deficit reduction plan’. 
        How convenient.  Hope we can hear it later.

  • Mel in Nashville

    This may be naive, but it seems that countries like Greece, Italy, etc., whose economy relies more on ‘tourism’ than ‘manufacturing’ (Germany), would really suffer from the ‘Euro.’  I have been to Greece and most businesses are ‘mom and pop’ ops that make money off tourism.  I wonder what the numbers are on ‘loss of tourism’ since the EU. I’ve never heard anyone address this issue.  I know there are broader, deeper economic issues, but I’ve never heard anyone address this issue directly.  -Thank you.

  • The man from UNKLE

    looking at the european bank leverage 

    http://earlywarn.blogspot.com/2011/06/european-bank-leverage.html

    It’s gonna be a big few months. Nervy times. 

  • BankerDanger

    Greg Camp –
    Earlier today, you wrote:

    “Europe today is like the United States during the period of the Articles of Confederation, and it faces a choice:  Split back into independent countries or become a United States of Europe.”I understand your analogy, however, the economic and underlying political solution for the Euro-zone is not so ‘black-and-white’.
    Obviously, they have had centuries of not so subtle linguistic differences, estranged cultural heritages, widely varying political histories, and competing aristocratic legacies.
     
    Along with their current divergent economic realities, the European Union is a far riskier, grander and more intricately involved plan taken on by the Central Bankers of the West than ever was our nascent republic in the US.

  • M Bombrun

    It’s a great conversation… however I wish OnPoint had “European” (German, French, Belgian, Italian, Greek, Spanish, Dutch, etc…) guests to discuss this, so we could better understand what they think and what the real issues are, and not only through our own US lenses…

  • Dr Chris

    I’ve read Germany owns 49% of Greece’s debt.
    I’ve read we own 51% of Greeces debt.
    What are we doing owning a huge percent of any Greece’s debt?
    Let the Europeans take care of themselves. . .
    We need to think or our own country and quit playing “big man on campus” with American tax payer”s money!
    Dr Chris

  • Dr Chris

    Give us, give, give, give. . .
    We bailed Europeout after WWI and II.
    Rebuiilt them from the ground up.
    How many countries bailed out on their loans to us?
    One of the guests jsut said Europe has a GnP the size of America. . .
    Why are we continuing to have to help Europe with huge loans these many decades after WW II?
    Letus have a “fire Sale”.
    Greece can give up a few art treasures for colateral and so on,. . .
    Feed a man, or country, a fish, and you have fed them for a day.
    Time for Europe to “Man Up” and care for themselves. . .

    • Bunnbev7

       Hey Dr. Chris. Germany has never given Greece it’s reparation after WWII, why don’t you read your history. From where do you get your opinion, Mad Magazine, Mickey Mouse? Do you live in Europe? Who the freaking hell needs America, we are all Americans here having served America and now we don’t need America’s crap.

  • Eliotfisk

    Tom and co !!! I continue to plan my day around the 10 am start of On Point. Always try to drive into NEC at that time or come back out at 7 PM to catch the re run  Keep up the great work!  Look forward tos eeing you all on Oct 4!
    Love
    Eliot Fisk

  • Dan

    FYI this was above my head.  I wanted to listen to this so I would be less ignorant of the situation, but after listening to about half, I realized I still don’t get it.  I restarted it, and it was still above my head in the first few sentences.  Partly thats on me, but this broadcast as a resource also failed me.  The processes discussed for progress all needed to be defined or given context before the solutions were explained.  I’ll go look elsewhere for more historical or contextual explanation of the situation. 

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