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Serious Stuff

Why the Euro Will Last

March 10, 2012 by Somebody Else

If ever there was a topic of worldwide importance out there that has been massively obfuscated by a bevy of statistics, the European Union is it. These days, we read article after article on the Internet telling us what the experts are saying on this matter, and the gist of that information is the following:

The situation is highly complex. Several different nations are involved. There is a common currency, the Euro. Some nations are economically weaker than others. The economically stronger nations are facing the extremely unpleasant prospect of having to bail out the weaker ones. The economically weaker nations are being asked to implement unpopular and drastic austerity measures as a means of dealing with their massive debts.

Lots of finger pointing is going on. The stronger nations accuse the weaker ones of living beyond their means, in other words, of taking advantage of their association with the European Union to rock and roll all night and party every day without paying the tab. In response, the weaker nations accuse the stronger ones of having helped to create a gargantuan financial bubble that popped, leaving them in the lurch without adequate backup to make a full recovery.

Then, here come the statisticians and the economic experts with their fiscal crystal balls. There are rumors that a deal is "in the works" to save Greece. Maybe so, say the pundits, but, they argue, it can only be a temporary fix. They claim to have a whole lot of incredibly complicated financial information that you and I just can't possibly understand, and the upshot of it all is this, that the complete European Union Euro thing is on the ropes. According to such a view, the union's leadership is just biding its time, trying to find the best way to let the whole Frankenstein-styled contrivance implode as gracefully as possible.

Trust us, say those highly revered analysts of international finance, we know, because we are the all-knowing and all-wise ones, and you are just ignorant peons making pathetic efforts to dimly comprehend what we say.

By implication, or in some instances in an outright manner, the doomsday-leaning talking heads are asserting that the whole idea of the European Union Euro has been a big, tragic mistake, a misbegotten idea, a cloying pie-in-the-sky dream of Michael Jacksonesque make-this-world-a-better-place sentimentality that has not been able to survive the harsh, cold light of day in the very brutal and very real dog-eat-dog world.

Humph, they remark, good thing that Great Britain had the imminently good sense to stay out of the Eurozone and not adopt the Euro in place of the British pound. Just think of what a mess they'd be in now if they had. Thus goes their argument.

You might recall that the American press has pretty consistently hammered all efforts at supporting the Euro from the very beginning. They've scoffed, they've ridiculed, they've said that the whole thing would never get off the ground, etc. There were pessimistic predictions at the turn of the century, right when the Euro was being introduced, that the currency would be a total flop, that within a very brief period of time, the Europeans would realize their grave mistake, and that they would give up their half-baked project.

European Central Bank headquarters in Frankfurt, Germany

But it didn't happen, people. The Euro went right on ahead in spite of the naysayers, and in a matter of a few years, it became the world's number-two currency, right after the good old trusty United States dollar. The Euro did a lot to increase Europe's ability to conduct business with the world and to facilitate commerce among the European Union's various member nations. In short, it made Europe a stronger competitor against the United States on the world's stage. No wonder those corporate-funded American columnists have been so intent upon casting the Euro in a negative light. They've got a diamond-encrusted, platinum-plated axe to grind.

Well, as far as all of this goes, the stock market has shown what happens when a whole lot of people with a whole lot of power and money act like chickens with their heads cut off. Each day, as the situation continues to unfold in the European Union, zillions of dollars are traded this way and that way in response to each little piece of news.

Fear and panic have become the norm. The price of gold has been driven sky-high because of such widespread investor insecurity. Bullion buyers are hedging their bets against the failure of the Euro. If the embattled currency collapses, so they think, at least I'll have my gold.

You know what, let's get real. Gold is a lousy investment. Today, gold is the equivalent of what real estate was in 2006 and what tech stocks were in 2000. Let me translate this for you -- it's a bubble just waiting to burst, but with one important difference. Real estate and tech stocks hyper inflated because of deregulatory greed. The price of gold has ballooned because of fear. When the fear is gone -- and trust me on this, it cannot last -- gold will very quickly find its proper valuation, which may be less than a third of its current going rate.

If I were a betting man, I would put my money down on the survival of the Euro. My rationale is not complicated and does not involve a load of mind-numbing statistics. I don't have to tell you what a bunch of experts out there have said. I don't have to include a mess of quotes from so-called people in the know. All I need to do is to refer you to this one little Wikipedia article on the European Union:

You'll see how the EU has progressively grown bit by bit since the 1950s, gradually adding on state after state. It has been a slow but steady progression towards political and fiscal union for quite some time. And when we consider Europe's tragic past, involving countless centuries of strife and bloodshed, shouldn't we consider union on that continent to be a good thing?

Also, progress towards unity in Europe is not driven so much by idealism as it is by pure pragmatism. It is a survival strategy, and the member nations of the EU know this. Europe realizes that it must pool and coordinate its resources, otherwise its efforts to negotiate and trade with the big players on the world's stage, such as the United States and China, will be severely limited.

For all of those reasons, the Euro and the European Union are not going anywhere any time soon. Greece, Italy and Ireland will not be allowed to collapse. The leaders of the European Union will do whatever is possible to ensure the integrity of their common currency and their economic union. If it means bailing out weaker member nations, they will do it. They may sigh and complain and criticize, but they will do it. And they will likely change the laws and impose new conditions and adjust relationships in their efforts to prevent another potential meltdown like the one they are currently facing. The economically weaker countries will hem and haw and grimace and grumble about those undesired measures, but they will have to accept them, like them or not, because the alternative, that is, a return to pre-Euro conditions, is unthinkable.

In the bigger picture, the current crisis in Europe is just part of the learning curve. The European Union and the Euro are ideas whose time has already come, and they are here to stay, in spite of corporate-funded American pundits, hysterical stock-market analysts and panicked gold investors. Europe will get through the current crisis a bit older and wiser, and the world will move on. And if you've put all of your money into gold, take it all out now and put it back in the stock market, before it's too late. The fear can only last for so long.

"Won't you tell me where my country lies?" said the unifaun to his true love's eyes...