Europe

The Lehmann Letter (SM)

The stock market is down today because of continuing concerns over the euro's fate and Greece's ability to avoid default.

It is difficult to sort through each nation's statements and interests regarding these events. But it is not difficult to put current developments in historical perspective.

The European nations were at each other's throats for over 500 years, going back to when the modern nation-state was born. World War II brought a cataclysmic end to that approach. For the past 65 years Europe has knit itself into an organization that would have been difficult to imagine 100 years ago. The European nations have renounced war and accepted their current frontiers while forging a customs union that goes well beyond internal tariff elimination. They succeeded in establishing a unified market.

Europe also, throughout most of its domain, installed a common currency. Now that currency faces its greatest challenge: A challenge associated with the lack of a central European government. Will Europe go forward and establish the new governance institutions necessary to stabilize the euro or will Europe go backward and permit the euro's collapse?

History indicates the Europeans will go forward. With every crisis since World War II Europe has forged stronger bonds rather than dismantle progress and its benefits. Let's hope Europe does so again.

© 2011 Michael B. Lehmann