The Lehmann
Letter (SM)
France and Greece
voted out their governments because of disillusionment with austerity and their
weak economies. This disillusionment is also apparent in Spain, Italy and other
nations on Europe's fringe that are struggling with high debt and high unemployment.
Mighty Germany, with relatively low unemployment and low debt, wanted them to
abide by the rules of the game: Higher taxes, lower spending and contracting
economies. They rebelled.
Now Europe
must re-examine how it will deal with weaker nations' government debt. New
French and Greek governments will turn away from austerity while Germany will
continue to advocate for austerity. Thus far, however, the newly elected are
not advocating the abandonment of the euro. The European project - an ever more
integrated continent - remains intact.
We will see
whether or not the continued drive toward European integration - Europe's goal
since the end of World War II - will survive this latest upheaval. The European
project has survived past challenges: Compromise has prevailed. This letter
believes compromise will prevail once more and the euro will survive.
(To be fully
informed visit http://www.beyourowneconomist.com/)
© 2012
Michael B. Lehmann
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