Our straight talking Lancashire lass takes a sideways look at the daily news.
What’s going on in Europe?
Big things are happening on the continent – events that can turn the tides of history and shape our future, probably in ways that we won’t expect.
France elected its first socialist government since the 1980s – booting out Nicolas Sarkozy and his trophy wife Carla Bruni. Likewise in the Greek elections, the deeply unpopular government was removed with no overall winner. So far a coalition has not been made, meaning Greece will likely hold another general election in two months.
So why should we be bothered about elections that take place in foreign countries thousands of miles away? The answer is because the UK is part of the European Union, so trouble in Europe inevitably means trouble at home.
Firstly, the severe austerity packages being rolled across floundering EU states like Greece were pushed by Germany, with the strong backing of the French government. Now that Sarkozy has gone, Germany’s Chancellor Angela Merkel cannot count on the same level of support from Francoise Hollande when imposing Draconian austerity measures in places like Greece, Italy, Portugal, Ireland and Spain.
It seems that revolution is in the air. Voters are saying 'No!' to increased pension ages, cuts to public spending, pay freezes and the rising cost of living. It’s not just in beleaguered countries like Greece. In the UK David Cameron took a right royal whipping in the local elections, and last month the Dutch government folded over the fiscal contract that was crippling their economy.
On the plus side, it shows that democracy is alive and kicking. But that doesn’t mean we are living in easy times.
So what will happen? Of course, it’s hard to say. There is no magic crystal ball that can predict the economic future of the EU. But we can make educated guesses.
If Greece defaults on their insane levels of debt – and it’s very likely that they will do so – then they will leave the Euro. If this happens, economics predict a domino effect, where Italy, Spain and Portugal follow suit. Once this starts happening, chances are the Euro will fail.
What then? Shares will plummet, there will be chaos in the banks, and we’ll see investors pulling their assets into financial safe havens. On the ground we’ll see widespread unemployment, especially youth unemployment, and a huge reduction in the standard of living in many European countries. It is possible that we will see civil unrest across the continent, with violent protests and the resurgence of the Far Right. In Greece the extremist Golden Dawn have already gained seats in the last election – this is disturbing. The fact that they gained 21 seats in the failing country does not bode well.
You only need to look into history to see the consequences of the austerity packages. The Greek government is now starting to resemble the Weimar republic prior to the Second World War – a useless coalition trying to manage a failing country. I’m not saying that this scenario will result in WWIII. But as business journalist James Poulos writes in Forbes.com, it is likely that Greece will become a failed state, and in all probability will end up in civil war.
What happens then is anyone’s guess. Interesting times indeed…