“Stocks, Oil Drop on Bailout Skepticism.” Are you surprised? Last Sunday the cry went round cyberspace: “A trillion dollars! We need it now, today, before the markets open Monday. Otherwise, Armageddon is at hand.”
Now where have you heard that song before?
Oh, right: from the One We’ve Been Waiting For last July: “I need $800 billion and I need it now, today.” That, in essence, was what President O. said last summer. It was the same with the so-called health care reform bill — Don’t read it, for God’s sake, just sign on the dotted line, now, today: you have to pass it, as N. Pelosi said, so you can find out what’s in it. Yes, really, she did say that.
All part of the strategy Indiana Governor Mitch Daniels called Obama’s “shock and awe statism.” And you have to hand it to these guys, there’s been plenty of shock — possibly somewhat less awe — to go around.
So now the Europeans are taking a page from the Obama playbook. Greece teeters on the abyss, the bond markets swoon, and it’s panic time all around.
Who are these people we’ve elected to “lead” us?
Keep that question in the back of your mind as you accompany Mr. Micawber on his trip to Greece. Like Mr. Micawber, Angela Merkel and Prime Minister George Papandreou are hoping that “something will turn up.” Like him, they expect it hourly. But, unlike Mr. Micawber, they have thus far failed to take on board that central bit of economic wisdom he imparted to young David Copperfield:
Annual income twenty pounds, annual expenditure nineteen nineteen six, result happiness. Annual income twenty pounds, annual expenditure twenty pounds ought and six, result misery. The blossom is blighted, the leaf is withered, the God of day goes down upon the dreary scene, and—and in short you are for ever floored.
“For ever floored” — not a good thing. The Europeans scramble and put together $1 trillion dollars in loan guarantees (including $50 billion or so from Uncle Sam, i.e., from you, Dear Reader) and the markets gyrated wildly upward. For a day. Monday, Monday: can’t trust that day, as the Mamas and Papas observed. For Tuesday came and, guess what, $1 trillion wasn’t enough!
What would be enough? As my friend Bill Voegeli puts it in his new book about America’s welfare state, the answer is nothing. The maw is always open. The appetite limitless. When it comes to government subsidy, the answer is Never Enough.
But here’s the problem: the muttering you hear is from the world’s bond markets. The trillion dollars just scrounged together by those seeking to “save the euro” is just a down payment. The problem is, it is a down payment that cannot be followed up with the balance. This latest exhibition of super state meddling is not a solution to any economic problem: it is just an extension of the problem. Two problems, actually. The smaller problem is the euro, a fictional currency created and maintained by a utopian act of will. I’ve always disliked the euro, partly, I admit, on aesthetic grounds. Europe is a poor place, aesthetically, without the franc, the Deutschmark, the lira. But there are also some good economic reasons to be skeptical of this mad money. The euro was supposed to make business transactions so much easier by relieving European countries from the burden of currency conversions. In fact, as the example of Greece just demonstrate, it exposes the stronger players to potentially fatal infection by the more feckless members of the “European community.” When euro banknotes were first introduced in 2002, I predicated they wouldn’t last a decade. Let’s see if I’m right. I’ll bet you a British pound that Angela Merkel has been thinking fond, nostalgic thoughts about the Greek drachmas recently.
What’s going to happen to the euro is a big problem. Far bigger, however, is what’s going to happen to the unsustainable government apparatus that has grown up to coddle the citizenry of the West. For year now, dour voices have been warning that Europe’s “generous” (i.e., irresponsible) welfare state couldn’t last. It was predicated on two sorts of growth that just weren’t there: population growth, on the one hand, and economic growth, on the other.
“Annual income $5 trillion euros, annual expenditure $5.5 trillion euros, result misery.” Big time, as Dick Cheney apostrophized in another context. The last time I looked, EU members were supposed to keep their deficits to about 3% of GDP. This year, the UK’s will be in the scrotum tightening neighborhood of 12%. In 2009, Greek ran a deficit of 13.6%.
Things are not looking better in California, Illinois, New York, and many other American states. As for the federal deficit, there is an entire governmental department working on creating enough zeros to represent the obscenity. Bottom line? The sojourn to Shangri-La is coming to an end. The train is going into the yard. All off, please. Look around for your possessions and exit as quickly and safely as you can.