Nightmare of Ungovernability

The ailing economies of the European Union have created a backlash in those populations whose governments are being held, feet to the fire, for irresponsibly bringing them to the point of that dreaded austerity and cut-backs in hopes of bringing fiscal health back to the fore.  One government after the other has been tossed, from Italy to Greece and France, and Spain is next in line.

Silvio Berlosconi is history, although he did show up as an honoured guest at Vladimir Putin's restoration to the Russian presidency celebrations.  Italian voters joined their other European counterparts in expressing their rage over austerity policies being imposed upon them.  French Socialist leader Francois Hollande has informed Berlin that Paris wishes to renegotiate the agreed-upon fiscal pact.

Those dreaded tax hikes, pension cuts and labour reforms have ensured a furious reaction from European society accustomed to the comforts of a socially-responsive universal welfare program that all have become accustomed to and resist losing.  It is not their free social-welfare spending habits that have incurred their national debts, but the association with the euro and the EU, and the imposition of strictures related to both.

In North America, workers could only dream of successfully evading paying tax to their governments as was so common in Greece and elsewhere.  In North America, those long, carefree, routine summer holidays that France enjoyed, shutting down the country, was something of the stuff dreams were made of.  Good salaries and benefits entitlements, evasion of tax payment and insistence that government listen to the people not the other way around formed the basis of popular governments in Europe.

The violent protests and anti-austerity backlash by voters in Greece and France took no one by surprise.  And the stock markets and the euro currency reacted predictably.  In Greece, popular opinion rages with refusals to honour the sovereign debt, and if the country goes into default, can it be possible people cannot foresee a far more difficult time ahead for themselves, their country and future investment prospects?

German chancellor Angela Merkel, rigidly prepared to apply her own country's values and careful monitoring of their spending through prudent fiscal management, has no wish to renegotiate the agreed-upon fiscal discipline treaty, although she is open to working with Francois Hollande.  Who claims Paris will not ratify the treaty without additional measures to promote economic growth.

With the kind of performance that may toddle along as a result of Europeans' unwillingness to be fiscally prudent, financial markets will be unwilling to keep lending to countries that cannot guarantee their loans will be repaid.  It is simple arithmetic.  Europe is facing hard times on the heels of a protracted recession.

There are few palatable options left to consider other than to finally accept the reality that hard times call for hard decision making.  The uncreditworthy will be deemed too dangerous to continue funding.  The euro doesn't appear to have truly succeeded in providing diverse economies, cultures and traditions with a reliable single currency.

Ditch it all, and everyone fend for themselves?  Unity in financial distress becomes difficult when several countries which practise restraint and responsibility find themselves in the position of paying heavily to bail out those countries that value loose funding formulas for social spending that people become accustomed to and demand.

So it's out with the old government, in with the new that purports to share the outrage of the electors.  And it will be instructive to see how successful they feel they can be in prosecuting their idea of fiscal responsibility, expecting the Eurogroup and the International Monetary Fund to ride to their rescue.