Belmont Club

Deer in the Headlights

Opinion is divided over whether France, Greece or Spain will take center stage next in the European saga. Some say France. With the Merkozy act split, the Telegraph writes that a replacement must be found for the absent French partner at German insistence. “France election: Germany rules out reworking EU’s ‘fiskalpakt’ despite calls to do so by Francois Hollande, France’s president-elect.”

But there may be no drama there. The conventional wisdom is that Hollande will assume any position necessary to preserve Europe, which is almost as important to the French Socialist party as socialism itself. He will dance in pinched shoes if need be, but the same cannot be said of the Greeks. The new Greek government looks set to renege on the terms of its bailout.

Greece has once again become a powder keg. The rise of a more radicalized left party, Syriza headed by Alexis Tsipras, has broken the pro-Europe control of the country’s major parties. Tsipras has threatened the rest of Europe, saying “this crisis isn’t just Greek, it’s European […], there will either be a collective, sustainable and fair European solution to the public debt issue or it will collectively fall apart”.

But if Greece is the obvious locus of the next act, what about Spain, where government has decided it may bail out the private banking sector while insisting it needs no bailing out because it is in no danger? As in most cases where the bureaucrats are preparing feverishly against what they proclaim to be unnecessary, the public is beginning to suspect that the inevitable is probably imminent.

Rodrigo Rato stepped down as head of the Bankia group as a government bailout loomed after Spanish Prime Minister Mariano Rajoy retreated from a pledge to avoid using public money to save lenders …

Spain is struggling to douse speculation it will need an international rescue to shore up its banks. The Bankia group, which was singled out in an IMF report on Spanish lenders last month, is key to Rajoy’s efforts to overhaul the industry. Its assets amount to almost a third of the Spanish economy and it held 38 billion euros ($49 billion) of real estate at the end of 2011, more than any other Spanish lender.

France, Greece or Spain? It doesn’t matter, says Daniel Hannan, a Conservative MEP (European parliamentarian) who says of recent events in his commentary: “France and Greece are just the beginning – Europe is entering a downward spiral.”

The key problem, he writes, is the false choice between increasing the tax burden to retire debt and increasing the debt. Having failed to do the former, the European parties are prepared to return to the latter. “So why do voters hope to solve the crisis by accelerating the policies which led to it?”

Much of the blame must attach to the Centre-Right parties currently in office in most national capitals. Though they talk of fiscal prudence, many of them are in reality locked into Euro-corporatism. With a handful of honourable exceptions, they have presided over crony capitalism, more spending, more taxes and more debt. Their failure has opened the door to the angry and populist Left. When the ‘Right’ is represented by Samaras and Sarkozy, it’s no surprise that voters cast around for radical alternatives. After all, when it comes to the euro, the Trotskyists have been proved right. They argued all along that, while the single currency would suit the suits, working people would suffer.

Because they don’t know anything else. Because it has seemed to work for so long they don’t know how to do anything else. Because it has always been a case of “heads we win, tails the public loses”. Both the “populist left” and the “centre-right” drink from the same river of public funds. The sole distinction is that while the first fatten one set of cronies, the second fattens a slightly different set of cronies.

And the worse things get, the likelier people are to demand the high-tax, high-spend policies which caused the mess. The eurozone is now in a vicious circle,” Hannan concludes.  The cure, having caused the disease, will be used to treat the disease.  If Hannan is correct, the likely outcome of the latest European elections will be to replicate, on a grand political scale, the powered flight into the ocean of Air France Flight 447.

Readers will recall that due to problem with the flight control software, the Flight 447 crew responded to a stall by pulling up, thereby decreasing the aircraft’s ability to fly. They rinsed and repeated until the airliner went into the drink. No one survived.

While the investigation is still awaiting formal conclusion, preliminary reports of the BEA stated that the aircraft crashed following an aerodynamic stall caused by inconsistent airspeed sensor readings, the disengagement of the autopilot, and the pilot making nose-up inputs despite stall warnings, causing a fatal loss of airspeed and a sharp descent. Additionally, reports indicated that the pilots had not received specific training in “manual airplane handling of approach to stall and stall recovery at high altitude”, and that this was not a standard training requirement at the time of the accident.

The vicious circle that Hannan referred to will resemble this. Runaway tax and spend creates an economic crisis to which the politicians respond by applying a stimulus, increasing the debt, distorting the markets, causing the economy to fall even further. This cycle will be repeated because the public thinks it works; and so the mistake will be continued until the entire political cabin suddenly and inexplicably goes black. In the movies the credits roll.

In real life the struggle for survival only then begins, with sharks, wolves or whatever else surrounds the crash site to contend with. ‘Why don’t they put the nose down?’ the movie audience yells. Because it’s in the script. Political responses are now almost predetermined by half a century of conventional wisdom. Once it had been accepted that the public had “a right” to housing, pension, health care, 35 hour work weeks and security without the necessity of maintaining an Army — evil in any case, all else followed.

The reason Europe — and perhaps the United States — cannot vary their response is that to go back on these assumptions is now unthinkable. Once an idea becomes implanted in the subconscious, it acquires a force an explicit thought could never possess. Consider the following news item. Recently, “South Korea … seized thousands of smuggled drug capsules filled with powdered flesh from dead babies, which some people believe can cure disease.” Isn’t that an outrage?

The capsules were made in northeastern China from babies whose bodies were chopped into small pieces and dried on stoves before being turned into powder, the Korea Customs Service said.

Customs officials refused to say where the dead babies came from or who made the capsules, citing possible diplomatic friction with Beijing.

Chinese officials ordered an investigation into the production of drugs made from dead fetuses or newborns last year.

But wait. Didn’t the Guardian proudly announce in 2009 that Barack Obama would “overturn an important medical research policy of George Bush’s presidency on Monday, by ending restrictions on federal funding for embryonic stem cell research which scientists consider crucial for the development of new medical treatments”?

It is the latest in a series of actions by the president casting aside some of Bush’s most divisive policies. Throughout his tenure Bush was accused of substituting ideology for scientific evidence on issues such as stem cell research, energy and birth control. In 2007 Obama, then a senator, said Bush’s obstruction of stem cell research was “deferring the hopes of millions of Americans who do not have the time to keep waiting for the cure that may save or extend their lives”.

What could be wrong with that? Thus any logical outrage over the Chinese pills really involves means, not ends. In both cases the unconscious imperative tells us ‘this is good, do it’. The accepted narrative now wholly determines policy responses, all the more powerful because we hardly give it a thought. The survival — meaning the death — of Europe is now a consequence of its shibboleths.  The only way it can escape the sacrifice is to escape its own temple. Given a choice between national economic ruin and a ruinous Europe there is no question that the political parties will choose the former over the latter.

Historical tragedy is usually the account of civilizations unsuccessfully trying to free themselves from the dead ideas of the past. Time will tell whether the West will escape that fate this time.

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