Diversity in Europe is the Key to Understanding the Eurozone Crisis

by Martin Armstrong

COMMENT: Mr. Armstrong; I find your analysis refreshing here in Europe. Sometimes we cannot always look in the mirror objectively. You are correct that perhaps the greatest fault in trying to create the euro has been this idea of forcing one culture upon everyone in Europe. The feelings about the EU are very different in the south compared to the north.

Thank you for being unbiased. It does help to see things through different eyes.


REPLY: Perspective is everything. When I speak to people in government in Italy, they see the EU as oppressive andr believe their country is now occupied with the will of Brussels being imposed against their own culture. I have lived in Europe and I have probably spent 1/3rd of my life there. What I LOVEDabout Europe was indeed the diverse culture. Language has been the greatest stumbling block. Even myself, very short trips running around between countries puts a different strain on you. In just 10 days, I was in Germany, then flew to Zurich, then down to Milan, over the Paris, off to London, and then back to Frankfurt. While I was checking into a hole in Paris, there was a Japanese couple trying to check in and the hotel had nobody to speak Japanese. I then stepped in trying to help. After a few days, you try to speak and a missmash comes out of several languages combined and you are so tired, it gets hard to keep flipping between the languages. I LOVE Europe for that, but not on a business trip of rushing around in the middle of madness. Even getting cash from an ATM varied depending on the country you were in. In Switerland, 1,000 CHF was no problem. In Paris, €200 euros was max.

There is absolutely no open question that the European Union remains a very diverse Union. There are significant differences in the concerns of the people in the EU as a whole. I have explained that SOuthern Europe got the worse deal. They converted their debts to Euro and then the Euro rose from 80 cents to $1.60 doubling their national debts and the austerity policy forced economic recession upon their economies. In southern European countries, the YouGov polls showed that unemployment was seen as the major issue, but this was less so elsewhere in northern Europe where the number one issue was terrorism.

The terrorism was viewed as a major issue in Britain, France and Germany, where the terrorist acts have been primarily targeted. The number one concern was health and social security when you turned to Poland and it was a top concern also in northern European countries. Lithuania was the only place where inflation was the most important current issue. Sweden was the only country where crime came in the top three, but this was related to the immigration issue which is beginning to create a new Separatist movement there as well.

While the whole thing with global warming seems to be mostly confined to northern Europe rather than southern. Nevertheless, the refugee crisis, of immigration crisis as well as rising terrorism as a result, are clearly the two top issues across the EU as a whole. The YouGov poll is indeed showing the diversity among the cultures within the Eurozone. This idea that one central government can dictate policies to be imposed on the whole is a failed model that has brought about the communist revolutions. Even in the USA, there are 12 branches of the Federal Reserve BECAUSE after the Panic of 1907, it was realized that there was a great diversity economically throughout the United States. We have called it the Texas-New York Arbitrage for when commodities boom, New York suffers. That diversity was suppressed by Roosevelt to impose one central policy on the nation to fight World War II. It was never returned to normal and this once again is fueling regional discontent despite the single language. ONE-SIZE does not fit all and Europe copies the Roosevelt model rather than understand the history behind the economy. It was the diversity that made America work. The same is true in Europe. You cannot force cultural change to this ONE-SIZE fits all policy. It will fuel the separatists as it is doing in the United States to a lessor degree driven more by left v right politics.