Jay B Gaskill
Since 2002, the collective European sovereign debt has outgrown the gross domestic products of the same nations by about 20 trillion Euros. There simply are not enough free euros to prevent even one small European default, certainly not enough capital for a bailout on the required multi-state scale… period. Several countries are headed to a daisy-chain default sometime within the next 12 to 20 months. They include Greece, Portugal, Spain Italy and even France. There is a tipping point somewhere down this timeline, after which events will move very quickly.
The current maneuvering within the EU is a thinly disguised kick-the-can down-the-road maneuver for one last time. It is not designed to prevent default (because default is inevitable), but only to buy more time to try find effective ways to protect some comparatively solvent healthy EU banks. Whatever protective steps are taken in the next few weeks, when several countries capsize and go under in nearby waters, there will be a great sucking vortex. Boats will toss in Europe and the UK and unsettling ripples will reach the shores of US commerce.
Only the US has enough time to take the austerity measures that can head off a bloody reckoning here.
“NEW YORK (Dow Jones)--U.S. companies are beginning to discuss a once-unthinkable possibility: life after the euro. Europe's sovereign debt crisis has dragged on for over two years, but it wasn't until the last few weeks that banks and other big currency market participants began warning that one or more countries could leave the euro. European leaders have yet to agree on how to assist countries that cannot finance their debt, a task made all the more difficult as the euro zone teeters on the edge of a recession.”
The Wall Street Journal, 12-1-11
“The European problem is a ballooning welfare entitlement state that is bankrupting most of Europe’s governments. And high European tax rates are strangling economic growth. And the debt that private investors won’t buy is held by a banking system that is increasingly vulnerable. And Germany, the strongman of Europe, doesn’t want to pay to bail out the southern countries or anyone else -- including, it would seem, France.” Larry Kudlow, host of CNBC’s “The Kudlow Report”.
Do we take to the hills or what?
Realistic optimism is grounded in the understanding that three forces in human affairs – rational self-interest, moral clarity and the thirst for freedom - will always converge in to rescue us from stupidity and denial. The combined impact of these three forces cannot forever be denied or marginalized even by the most sophisticated elites.
It is not in the rational self-interest of a comparatively healthy enterprise or country to commit fiscal suicide by accelerating its own demise in a futile attempt to rescue another enterprise or country bent on self-destruction. Common sense is founded in moral clarity. The collectivization of failure is a form of suicidal behavior bordering on evil. When a healthy organism, enterprise or country refuses to accept the “wisdom” of governing elites who are asking it to fatally damage itself in order to join or remain in a sick system, that is manifestly not evil. It is an exercise of rational self-interest and an assertion of freedom and common sense.
We can be cautiously optimistic because a pivotal moment inevitably arrives when good people recover their common sense, courage and will, because history always provides them with an “oh shit epiphany”. You hear it on the black box flight recorders as the last words of the hapless pilots just before impact. It is a gift. Pray that epiphany arrives when we still have enough time to pull out of a dive. Reality is a stern teacher. Belated foresight sharply punctures the balloon of the prevailing illusions. But there are always survivors. The key is to be among them.
Why were the prophets so often ridiculed and berated in their lifetimes? …Because the four words that most foolish elites hate to hear above all others are - I told you so.
Europe is the crash dummy of our time. It is a gift. Take heed, there is still time for us.
Copyright © 2011 by Jay B Gaskill, Attorney at law As first published on The Policy Think Site www.jaygaskill.com - And the Dot-2-Dot Blog.