Europe's lessons for the U.S.

Europe's lessons for the U.S.

America can see the wreck ahead and still has time to avoid it.

John Campbell
Orange County Register
July 13, 2012

Unless you have been hiding in Attorney General Eric Holder's "Fast and Furious" file cabinet, you know that trouble is brewing in Europe. Real big trouble. None of us knows where it will go from here, but I can see no good outcome.

The experiment of monetary union without fiscal or political union has failed. Most of the solutions European leaders are discussing will simply delay the inevitable. Using debt that you have no plan to repay in order to pay other debts that you can't repay doesn't work with mortgages and will not work with governments. And, it is hard to even describe the political challenges they have over there. Look at the gridlock we have here with one country, one culture and two political parties. Now, imagine having 17 countries, dozens of cultures and more like 100 political parties.

Whenever the European crisis hits and however it is manifested, the U.S. will be affected. How much is impossible to predict at this point. But, there is a way that we can actually benefit from the problems in Europe.

Here are four lessons we can learn from Europe, a list of what not to do. Unfortunately, each example is still on somebody's "to do" list in Washington:

•Socialism does not work – Socialism in Europe and in this country always starts the same way – promise people free health care and free retirement and free housing and whatever free stuff wins political favor. Some claim that the "rich" will pay for it all. But, the rich do not have enough money. They may have enough to pay for the very poor, but not for everyone. So, the socialists borrow the money. That way, they are still giving the populace free health care. But, at some point you can't borrow the money anymore because the people you are borrowing it from realize that they can never be paid back. This is the tipping point at which socialism fails. Past this point, you have to tax the people to whom you promised the "free" stuff in order to pay for their "free" stuff (those people are the middle class). The people understandably don't want to give up their free stuff or have to pay for it. But, they will have to do one or the other. And, an entire generation will suffer.

•Don't delay fixes – Many of the debt problems of European countries were apparent years ago. But, they kept putting off the solutions for the reasons above. As a result, they got to a point at which the depth of the problem had eliminated the efficacy of most possible solutions. America has a debt problem. The problems in Europe have actually bought us some time as we remain "the cleanest shirt in a dirty laundry bag." But, not much time. The government has run up a trillion-dollar deficit in every year of Barack Obama's presidency, and will continue to do so under his current budget proposal. This cannot happen or we will descend into decades of economic darkness and reduced living standards. We need to get on it now.

•Don't try to fix it all at once – Big spending cuts and big tax increases imposed on a fragile economy will trigger recession. Such is the case in Europe and would be here. We should not fix our deficit in one year, even if we could find the political will to do so. We should move to a balanced budget over five to eight years with a combination of cuts, reforms and growth. The economy would not adapt well to the shock of pulling $1.3 trillion out of it in one year. And, if we take our time, the markets will react very favorably.

•Don't fool yourself – Some believe that socialism in Germany has worked, but they are missing something. The euro has been enormously helpful to Germany because it allowed the citizens of Greece and Spain and other less-productive countries to buy German goods using an overvalued common currency. If Greece (or any other country) leaves the eurozone, their new, lower-valued currency would greatly reduce the wealth of their population and will buy a lot fewer German goods. Germany has been enjoying a bubble supported by the euro, which undervalued German goods and overvalued the ability of others in Europe to buy them. Were this bubble to burst, Germany's output and, therefore, its social programs, would also come under strain. Germans will be the last people in continental Europe to feel the pain, but they will feel it.

We should never fool ourselves into false security when the basis of our security is unstable. Europe is in trouble. The United States will follow if we follow the same path.

TexasBlue wrote:[

•Don't fool yourself – Some believe that socialism in Germany has worked, but they are missing something. The euro has been enormously helpful to Germany because it allowed the citizens of Greece and Spain and other less-productive countries to buy German goods using an overvalued common currency. If Greece (or any other country) leaves the eurozone, their new, lower-valued currency would greatly reduce the wealth of their population and will buy a lot fewer German goods. Germany has been enjoying a bubble supported by the euro, which undervalued German goods and overvalued the ability of others in Europe to buy them. Were this bubble to burst, Germany's output and, therefore, its social programs, would also come under strain. Germans will be the last people in continental Europe to feel the pain, but they will feel it.

First of all, Germany is not a socialist country.
Somebody making the quote "None of us knows where it will go from here, but I can see no good outcome.", as if he is somebody important and his opinion matters at all, should know that. Also, i believe that when you say something like that, you may want to double check that your grammar is correct. That might make you a bit more credible.
But I'm used to Americans not knowing the difference between socialism, communism and capitalism. It's whatever fits their beliefs.

As far as the worth of the Euro goes:
If Greece leaves the Euro, the Euro would lose some of its worth. This however would be good for Germany because Germany is an export nation. A cheaper currency would mean more people could afford German products abroad, which would lead to more purchasing of German products. Obviously this would strengthen the German economy.
Also, the Euro has not only helped Germany because Europeans can buy more German products. It has also hurt Germany when looking at this the other way around. Germany buys lots of groceries from countries like Greece, Spain and Italy. Before the Euro, the Mark was much stronger than the currencies of those 3 countries, making the purchase of products from those countries cheap. Now that all these countries have the same currency, it's not that cheap anymore.

This author is obviously an idiot. More one sided reporting and picking out the facts that support ones side of a story. And you take him by his word without even thinking about the other side of the story.

And all these "Europe is failing" articles are nothing but wishful thinking and jealous bickering. The fact is that many countries in Europe still enjoy a higher standard of living than the United States. Picking out the weak ones and applying their standard to the whole community is like saying that American cities must be poor and filled with crimes because hey, that's what Detroit is like!

I cant believe this idiot is a congressman!

BubbleBliss wrote:
I cant believe this idiot is a congressman!

Why not? Barak Obama is our President and he makes that congressman look like genius!

BubbleBliss wrote:This author is obviously an idiot. More one sided reporting and picking out the facts that support ones side of a story. And you take him by his word without even thinking about the other side of the story.

I posted this to see if you'd join in.... and you did!

Hey... post some one-sided stuff of your own. You're allowed to do that, ya know. It's a political forum. We debate here. I'm a conservative and I won't post things that make liberals look good. Kapiche?

the rich do not have enough money.

That's rich!
What a nice way to promote the great capitalism society. Get rich but you can't be really rich.
Who are these rich people that don't have enough money?

The rich have enough money. They just don't wanna give it to anybody other than themselves or their own kind.
This is not a "you can't be successful" mantra but rather a "what do you do when you are successful" chant. The wealthy aren't willing to give back or pay more to assist others.

No thanks, I'd rather think for my own instead of having somebody do it for me

BubbleBliss wrote:No thanks, I'd rather think for my own instead of having somebody do it for me

That's silly. You know me well enough now for the last 4 years or so. You know I can bring a good debate. I need nobody to think for me. I don't listen to talk radio and haven't for about 6 years. Even when I was unemployed, I didn't go there.

I prefer to throw things out there to spurt debate. It seems that it offends people because I don't throw stuff out there that they agree with. Again, I say to everyone who is opposite of me (ideologically) to bring their stuff. That's what this place is for. That's what any political board is for. NP has been doing it now and then. He gets picked apart though.

By the way, this place opened on Feb. 22, 2010. FYI.

It's not you I was talking about, Tex. You post your opinion articles, but also some neutral ones. But when you only post articles from right wing sites that are almost guaranteed to have a bias, then that raises some questions, IMO. And I realize that there are some scandals that you only read about when somebody on the right points it out, but I think that if it really is big enough news, other news networks will cover it. If not American, then I will read it in my German papers here.

Yeah and I became a member 4 days after you openend this bitch up!