The Bell Tolls

Preface

Europe – still not having properly dealt with issues raised by the common currency, debt, free-market-unfriendly regulatory regimes, and the like – is now also confronted with a continuous and seemingly unending stream of refugees (and also very likely migrants) from the Middle East, North Africa and southeastern Europe.

Both issues are causing divisions: between national governments and the EU, between national governments and other national governments, and between the people and their national governments.  On both issues – the economy and the refugees – Germany is playing a key role.

First, a brief history of the ramrodding that has been – and is – the European project, from Ambrose Evans-Pritchard:

Perhaps it would be churlish to point out that the cause of this near existential breakdown is a series of moves that have [head of the European Commission Jean-Claude Juncker’s] fingerprints all over them:

The fateful decision to launch the euro at Maastricht in 1991 without first establishing an EU political union to make it viable, and to do this despite crystal-clear warnings from experts within the Commission and the Bundesbank that it would inevitably lead to a crisis - the "beneficial crisis" as the EMU enthusiasts mischievously supposed.

The escalating treaties of Amsterdam, Nice and Lisbon, each concentrating power further in the hands of a deformed institutional system, sapping at the parliamentary lifeblood of the ancient nation-states that can alone be the fora of authentic democracy in Europe.

Above all, to destroy trust by overruling the categorical "No" of French and Dutch voters to the European Constitution in 2005, and bringing back the same treaty by executive Putsch, with a disgusted but complicit British prime minister signing the document in a side-room in Lisbon safely screened from the cameras.

Read the last paragraph again and let me know if you think there is not a powerful elite above the visible rulers.  If the British Prime Minister was actually in charge of anything, there would be little reason to be disgusted – simply don’t sign and thereby avoid disgust; if he was feigning disgust for the sake of the constituency back home – why?  To demonstrate he was a puppet?  Disgust and signing could only simultaneously occur if someone else was pulling the strings.

In any case, as long as local economic activity was generally moving in a good direction, the people remained relatively compliant.  This all changed significantly in 2008, with the financial calamity brought about by government control over the monetary and financial sectors.

Conflict

From Mehreen Khan, at The Telegraph (emphasis added):

…Mr Juncker said Europe could not continue in its "business as usual" fashion in the face of a refugee crisis and a stagnant economy.

"We have got to be frank: the bell tolls. Our European Union it is not in a good situation. There is a lack of Europe in the European Union, and lack of union in the EU."

The bell tolls for Europe.  From John Donne (1572-1631), Devotions Upon Emergent Occasions, Meditation XVII: Nunc Lento Sonitu Dicunt, Morieris:

Now this bell tolling softly for another,

says to me, Thou must die.

Perchance he for whom this bell tolls may be so ill as that he knows not it tolls for him…therefore never send to know for whom the bell tolls; It tolls for thee....

George Friedman sees this as well (as relayed by John Mauldin, emphasis added):

This is not simply about migrants. It is one more thing that shows Europe does not work and cannot make decisions.… What we are seeing before our eyes is the collapse of the European project. There is nothing meaningful when we say “EU.” It was an institution that functioned for a while, but countries are no longer paying any attention to Brussels.

Recall the earlier description of the force and trickery used to bring the EU project to this point.  Juncker is continuing this long tradition.  Returning to Ambrose, (who described the current situation in Europe as a “near existential breakdown”):

…Mr Juncker wishes to invoke treaty powers to force countries to accept 160,000 refugees by a quota, whether or not they agree with his solutions, or indeed whether or not they think it is highly dangerous given the state of total war that now exists between Western liberal civilisation and Jihadi fundamentalism.

By invoking EU law to impose quotas under pain of sanctions, Brussels has unwisely brought home the reality that states have given up sovereignty over their borders, police and judicial systems, just as they gave up economic sovereignty by joining the euro.

This comes as a rude shock, creating a new East-West rift within European affairs to match the North-South battles over EMU. With certain nuances, the peoples of Hungary, Slovakia, the Czech Republic, Poland and the Baltic states do not accept the legitimacy of the demands being made upon them.

Political divides between the EU and various national governments; political divides between the various national governments of Europe; political divides between the people and their national governments.  Returning to Mauldin:

The rise of anti-immigration political parties throughout Europe is now quite evident. Such parties are not yet a majority anywhere, but Marine Le Pen in France is only a crisis or two away from winning a national election.

Keep in mind that this demographic and social adjustment will be playing out on a continent that has just forced its eastern half to accept immigrants it did not want and whose southern tier is still trying to emerge from a deep, prolonged economic slump. Greece stayed in the club this time because it had little choice. That won’t always be the case.

As more and more countries, especially the larger ones, see themselves losing their sovereignty to Brussels and to an increasingly out-of-touch elitist leadership, the pressures on the European Union are going to become ever more profound.

The European project won’t work because it can’t work.  It is central planning of a very high order; central planning cannot long be sustained.  Further, with each edict another bit of consent is lost.  Maybe this mattered little when the economy was reasonably healthy.  For many in Europe, this is no longer the case.  On top of the tensions introduced due to the financial calamity, forced integration will not reduce the tensions.

The bell tolls.

Resolution

TBD, but I lean toward decentralization.

Bonus Coverage

As an aside, and returning to Mauldin:

My good friend Dennis Gartman wrote about this in his September 15 daily report:

But there is a very real demographic reason why Germany is so willing to take a surfeit of these refugees: German’s demographics demand it. Simply put, Germany’s population… and especially its indigenous… population is imploding swiftly and certainly.

Already there are very real shortages of young, skilled workers, and many German companies openly and regularly complain that they cannot hire enough workers to fill job vacancies because there are not enough workers available for those jobs.

Further, Germany needs younger workers to fill those jobs because it needs their salaries for the social welfare programs that Germany is so renowned for. Simply put, there are not enough workers paying into the social programs to pay for them at present, and this problem shall become worse, not better, unless Germany’s population swells measurably in the coming years and decades.

So, Ms. Merkel has a clear ulterior motive for her seeming generosity: she wants the present welfare system in Germany that benefits now and will even more greatly benefit more in the future her normal constituency. If Germans are going to retire they shall need either newly born Germans to take their place and pay into the social security systems or Germany shall need to “import” foreign workers. For now, it is the latter that Ms. Merkel is embracing.

Something is fishy about this.  There are already countless numbers of youth unemployed in Europe – European youth unemployed.  Greece, Spain, Italy and Portugal all have youth unemployment rates between 30% and 55%. 

It would seem much easier to absorb and integrate youth from these other European countries into Germany* than it will be to absorb and integrate anyone from the Middle East or North Africa.  If the need was for youthful labor, Merkel need not go to the Middle East to find it.

And so?  I continue in my view that Germany sees a better long-term future with the east (Russia, China; MacKinder’s World Island of Eurasia) than it does with the west.  Merkel’s behavior in the EU financial crisis has been to push others into pain, as if they want someone else to take the first overt step of breaking the union; it is Germany’s indirect way of getting out of the union without taking direct action themselves.

Merkel’s approach with the refugees can be interpreted in a similar light – a means to break up the union by adding significant pressure to other member states.  How much better would it be for European integration than to more proactively advocate for long-term employment opportunities in Germany for Europe’s unemployed youth. 

Non-German Europeans living and working in Germany in large numbers would do much more toward ensuring European integration via cooperative means than just about anything being done by Germany today. 

Yet this path is not taken.  I can think of some reasons why this might be so, yet none of these seem more compelling than the reasons to take this path.

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*I assume that EU rules make this already quite possible.  I am merely suggesting that overt programs can be taken by Germany to make it easier for unemployed youth in other EU countries to relocate and train.  This would also be less disruptive and less expensive than taking in refugees and migrants from vastly different cultures.