European Endgame: The Crackup or Tighter Union
Amid soaring debts and shrinking economies plagued by sclerosis, Eurocrats have navigated choppy waters much better than I ever thought they would. It’s difficult to determine what the endgame will be and when it will arrive: default, wild money printing, or muddling through. Whatever the case, the status quo is untenable. Either the EU will centralize even more tightly, braiding monetary and fiscal sovereignty into one knot, or it will fly apart into smaller pieces, smaller than even our current maps suggest. The New York Times has a story on the rising popularity of separatism:
There are countless things that hold unhappy countries, like marriages, together — shared history, shared wars, shared children, shared enemies. But the economic crisis in the European Union is also highlighting old grievances.
Many in Catalonia and Flanders, for example, argue that they pay significantly more into the national treasury than they receive, even as national governments cut public services. In this sense, the regional argument is the euro zone argument writ small, as richer northern countries like Germany, Finland and Austria complain that their comparative wealth and success are being drained to keep countries like Greece, Portugal and Spain afloat.
Some Venetians recently gathered to call for secession from Rome:
Protesters have gathered in front of the central government in Veneto, Italy to demand an immediate referendum on the region’s independence from Rome. The reason is mainly economic, according to the rally’s organizer.Demonstrators are presenting the local government with a resolution which demands an immediate referendum for the region to become its own country. The new territory would include Venice, the surrounding region of Veneto, and parts of Lombardy, Trentino and Friuli-Venezia Giulia.
This blog hopes for more new entries in the market for governance, but dissolution after both financial and sovereign debt crises is an ugly, painful way to get there. The forking paths to greater centralization or greater fragmentation remain open and yet opaque. Only the future will tell. More at Zero Hedge. (HT to Rui Nobre Pinheiro)