Watching the economic meltdown of the Eurozone has become a reality television series. Every day there is a new plot twist, political power play and last-second decision made under duress that kicks the inevitable conclusion to this sad story down the road.
The latest European ‘just-in-time’ save came last week when European leaders agreed to allow Eurozone rescue funds to prop up Spain’s failing banks and to purchase bonds from debt laden European governments like Italy and Spain who are finding it harder to sell their debt on the free market (seems like many are worried they might not be good for it – surprise!).
The whole arrangement is, of course, nonsensical and only delays the inevitable. In 2008, large banks around the world were deemed too big to fail and were bailed out by already debt-ridden sovereign governments. Now, these same sovereign governments are nearing financial insolvency and need the big banks to bail them out through the purchase of billions upon billions of government bonds. Of course, the banks can’t afford to take the risk, so now sovereign governments will agree to back the banks so the banks can back the sovereign governments.
The reason governments around the world are pursuing this strategy is quite simple. Most democratic nations and provinces are currently being governed by progressive big government parties that have found that by promising vast amounts of public spending they can buy their way to and retain power.
Many of these self-proclaimed ‘progressive’ politicians don’t want to admit something even more embarrassing. They don’t want to be the graphic illustration demonstrating why progressive quasi-socialist policies simply do not work. They don’t want to admit that the massive social entitlement programs, social engineering, and big government solutions to every ill faced by their people over the past several decades has turned their countries into dependent, debt-laden, financial weaklings - and they sure as heck don’t want to be the ones to have to tell their hundreds of millions of constituents that fact.
Nor are they too interested in the civil unrest that follows when millions of folks are told they are no longer entitled to their entitlements, nor will they be able to find a job because ‘progressive’ policies scared away or destroyed all the job creators.
They kick the can down the road as far as they can hoping they will be politically long gone when the day of financial reckoning has finally come.
Former British Prime Minister Margaret Thatcher was once quoted as saying “The problem with socialism is that eventually you run out of other people’s money to spend.”
Paired with another famous quote it becomes a dire warning of just how bad things can become when democratic countries eventually dash themselves upon the financial rocks of ‘progressive’ big government policies.
“A democracy cannot exist as a permanent form of government. It can only exist until the majority discovers it can vote itself largess out of the public treasury. After that, the majority always votes for the candidate promising the most benefits with the result the democracy collapses because of the loose fiscal policy ensuing, always to be followed by a dictatorship...”
The theory provides explanation to the sudden rise of extremist political groups in Greece decrying any measures of fiscal restraint, personal responsibility and increased economic freedom, as well as the continued increase in social unrest in that floundering nation.
We all hope the 1930s isn’t about to repeat itself, but we would be unwise to ignore the lessons of history (especially in Europe) that often have a habit of repeating themselves as experts claim to the very end that ‘this time it’s different.’
It would also be wise to reject the self-righteous delusion of political leaders closer to home and admit that the United States, Canada and Alberta are all on the same road as Europe albeit travelling a bit slower and with a few exit ramps still left ahead of us.
The exploding government spending and debt, out-of-control entitlement programs and social unrest are all underway in North America as well -it’s time to take the next exit ramp.
