The time was a year before the Euro launched, the place was the tiny town of Burghausen, Germany. Busloads of people from their sister city in France were welcomed with fluttering tricolors silently proclaiming liberty, equality, and brotherhood. It was declared “French Week” through the town as menus in German gave way to French and the whole town celebrated unity.
I asked Herr Mitterer, the owner of the Hotel Post, if this grand “Eurozone” idea was going to work. “It has to,” he replied, “We’ve seen the alternative.”
Underneath the giddy celebrations at the end of a long period of expansion, the Euro was launched in 1999. It was always a forced marriage, a necessity blessed like any marriage with talk of happiness and great times ahead. But at the first sign of trouble the cracks are showing. Fourteen years on it is at a turning point – move closer or forget the whole thing?
If you ask French President François Hollande, the solution is to move closer. The union, born in good times, simply does not have the ability to respond to what is clearly a depression throughout Europe. Consolidating everything together into one tighter family would create institutions that can respond to the crisis and move ahead.
Not so fast, say many voters – including a growing block in Germany that would just assume have a divorce. The Alternative for Germany is a new kid, but growing fast. It may pose the most significant threat to Chancellor Merkel’s government in September’s election.
This comes against the backdrop of a continuing crisis that is universally being called a “depression” without any reservation. Major news outlets on both sides of the Atlantic have handy guides to help readers navigate the daily barrage of bad news and crises. Many are starting to question the solvency of banks all across the Eurozone. Capital has become almost impossible for small businesses to obtain in many nations, and as we know from the (limited) success in restructuring here in the US that small businesses are the only way out.
Meanwhile, the kids of this marriage are growing restless. Youth unemployment is 66% in Greece, 56% in Spain, and 38% in Italy. Unemployed youth will likely make for a long, hot summer of protests and growing unrest.
What went so wrong in this forced marriage? The European Central Bank (ECB) was set up in good times and never had the tools to handle a crisis. There is no equivalent of the Federal Deposit Insurance Company (FDIC) to bail out bad banks, and there is no mechanism for wholesale quantitative easing as the Fed has done. Where both sides of the Atlantic have political stalemates, at least over here the Fed has been able to act and do something – the ECB is by comparison powerless.
That is the origin of the two ideas on how to move forward. One is to increase integration and have a body that can make the big decisions and stem the crises before they become big. The other growing popular movement would just assume walk away and forget the whole thing.
It is becoming clearer that the constant flow of bad news is coalescing into one very big story – what is this thing called “Europe” and where should it go? Those who are stuck in the marriage are sick of the fighting and stress and all thinking about where it goes from here.
Meanwhile, the original reason for the Eurozone is very much being laid bare. It has to work, if for no other reason than to prevent another disastrous war. But the generation that remembers war is dying off, and the kids left to carry on have no jobs and no hope. They will be the ones who make something of the rich heritage one way or the other.
This year we will find out just where they go with it.
“It has to work, we’ve seen the alternative,” keeps coming back to my ears. “Es muss macht, wir haben die Alternative betrachtet” is a much more compelling reason than the words of Schiller sung to van Beethoven’s tune so often in 1999, “Alle Menschen werden Brueder.”
If this has to work, it better start working now.
This piece is an attempt to bring context to many news stories on Europe from many different sources. Follow the links for more information.