The European Crisis Just Went from Bad … to Better

Just as we see the Arab Spring turning  brown in the Moslem Autumn, brace yourself because we’re about to experience a cold, hard European Winter.  In the last couple of weeks, our friends, the Euro spenders, have finally woken up to their financial debacle, and nobody’s made the coffee.  Austerity is the watchword, and there’s about to be enough tough love around to make everybody south of the Alps think they’re in rehab – and, to a certain extent, they will be.  There’ll be the usual demonstrations and condemnations, but march and chant all you want, people: the party’s over.  Let the hangover begin!  That’s the bad news.

The good news is for the first time since the EU bailiffs threatened to put a lien on the Acropolis there is actually some light at the end of the tunnel.

A couple of weeks ago, the Greek Tragedy took a definite turn for the better when Papendreou, the Prime Minister, decided to step down and collect his pension — before it disappeared entirely.   Remember, this is the guy who was going to hold a referendum to see if his fellow citizens, rioting in Athens, would vote yes to a couple more brutal kicks in the financial groin.  Not the sharpest skewer in the souvlaki, he was replaced by Lucas Papademos, who — believe it or not — is actually an economist.  Fancy that!  Hiring an economist to deal with a financial meltdown!  Who says the Greeks haven’t done dick since Pericles?

Around about the same time, over in Rome, class clown Silvio Berlusconi was given his walking papers, complete with dancing in the streets.  Apparently, somebody took time away from eyeballing Ruby Rubacuori and took a gander at the books.  As of this morning, Italy is a little over two trillion dollars short of a down payment on a cappuccino.  In other words, they’re up to their Armanis in debt, and this time, bread and circuses aren’t going to save them.  “Bunga, Bunga” retired gracefully, rather than be thrown to the lions, and he was replaced by Mario Monti.  Once again — wonder upon wonders — the guy’s an economist!  He better be a good one.

The third domino to fall happened in Spain on Sunday, November 20th, when Spanish voters returned the right-of-centre Partido Popular to power after a seven year absence.  As you recall (or maybe you don’t) the Spanish electorate tossed the PP out of power in 2004 when the Jihadists made it clear which way they wanted the vote to go — with a couple of commuter train bombings in Madrid.  For the last seven years, Jose Luis Zapatero and The Spanish Socialist Workers’ Party have been running the show with (to be fair) mixed results.  Unfortunately for the socialists, the only results the Spanish are hearing these days are 20% unemployment and a national debt big enough to choke an Andalusian stallion.  Zapatero saw the escritura on the wall and retired from politics.  Mariano Rajoy is in charge now, with a majority in the Cortes Generales and a mandate to clean up the mess.

Suddenly, all of Europe has turned a conservative blue.  (Just a note to my American friends.  The traditional political designations around the world have always been conservative blue and liberal red — just as they used to be in the United States.  It’s only the recent media manipulation of the colour wheel on election night maps that has changed the colours to Red states Republican, Blue states Democrat.  Coincidence? I think not, but that’s fodder for another blog.)

Anyway, as of last Monday morning, every government west of the Volga (with the exception of Slovakia – don’t ask) is either centre-right or out and out right of centre – in a word, fiscally conservative.  Granted, in European politics, right wing doesn’t mean much until you get to the nutsy fringe, but at least these folks understand that if you have two Euros, you don’t spend twelve.  Obviously, the European crisis is so massive even the most conservative government is going to have to tax and spend more than they want, just to keep the wheels rolling.  However, by understanding the simple accounting principle that the books have to balance eventually they may be able to stop the deficit haemorrhage.  More importantly, during the heated discussions between north and south that are about to ensue, with any luck at all, nobody will be throwing their political monkey wrench into the economic machinery.   It helps that, even though these Euro zone leaders aren’t necessarily all on the same page, at least they’re all finally reading from the same book.

Like it or not, if these new governments do it right, it’s going to be a hard, cold European winter. Unfortunately, there isn’t any second choice.  It would be a fatal mistake to think there is.

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