Friday, December 9, was another euphoric day in the stock market created by the latest empty deal to save the Eurozone. The almost 200 point gain was followed on Monday, December 12, with an almost 200 point drop. I can't count the number of times the market pundits on CNBC and elsewhere have vacillated between European Armageddon and economic solvency with the announcement of each deal and no-deal. Watching the situation unfold on a daily basis is like watching a loved-one in the throws of a destructive addiction, while they live in complete denial. Everyone else around the person can see them heading for disaster, but the individual thinks that the next high is going to fix everything.
The current problem across the pond is that since the currency called the Euro and the organization called the Eurozone were first fully implemented in 1999, they were doomed to fail. There are many complicated reasons why this is so, the basic one is something Prime Minister Margaret Thatcher said about Socialism, eventually you run out of other people's money to spend. Stronger countries like Germany and France are made weaker by countries like Greece that have no incentive to create their own prosperity and support themselves. This weakens the entire Eurozone because the currency is like a bastard child that no one wants to claim, but everyone feels obligated to support. When countries have competing currencies, there is more incentive for individual countries to develop their own economies to be prosperous.
This past Friday's meeting with the Eurozone's wizards of smart and attended by our very own Secretary of Idiocracy, the tax-cheating Timmy Geithner, produced a deal which has no teeth and resolves little except to make everyone feel good about doing something. Previously, the European Financial Stability Facility(EFSF) was created to help deal with the problem. As is the case with all Socialists when confronted with a serious problem of their own making, the answer is to create a commission, committee or acronym. The EFSF is like a toothless old beggar trying to fill it's pockets with funds it hopes the European Central Bank(ECB) will supply. And the ECB is begging support from the International Monetary Fund, which to a large extent means the American taxpayers.
Daniel Henninger, outspoken member of British Parliament, recently stated that he doesn't see how the Euro can survive. In fact, he says, British banks have been quietly exchanging Euros for other currencies. According to a dependable source, a Key Bank executive told him that they are doing the same. In fact, this executive said the bank feels that the collapse of the Euro is a fate a compli. I believe the late, great economist, Milton Friedman was correct when he surmised that the Euro would not survive its first serious crisis.
The Eurozone crisis is illustrative of the folly and destructive nature of central planning, whether there or in this country. The United States should view the current situation in the Eurozone as a cautionary tale of what will become our future if we don't reverse our course. Sadly, our current administration insists on traveling the same path that leads to the kind of financial and social melt-down we are currently witnessing in Europe.