Exactly 80 years ago, in the summer of 1931, an international banking disaster sent the Western economy into freefall and the resulting political anger led to the rise of Hitler and the Nazi party. We all know what happened next.
Today, we are facing a similar situation. Riots in Greece are just the tip of an unsettling iceberg.
Although the street violence and protests in Greece may seem like yet another far-away irrelevancy in an increasingly unstable world, we would do well to consider the implications for us all.
The fanciful idea of creating one “nation” called Europe with a united government, army, court, president and economic system has finally begun to show the flaws that were always at its heart. Corruption, greed, and the lust for power has meant that the ‘Great Federal Dream’ of unity is shattering into uncontrollable pieces.
The economic crisis that wasn’t supposed to happen took the Euro-zone by surprise and exposed the fact that it had no contingency plan. Thank God that the UK had the sense to stay out of the European Monetary System!
Yet, if the EU countries fall into irreversible debt and the rest of the world loses faith in the Euro it will affect the UK just as much as anywhere else. We have made ourselves slaves to the EU in every respect, and we would go under just as quickly.
When Greece joined the Euro zone ten years ago, they splashed out like there was no tomorrow and lied about their debts. Just like Ireland, Portugal and Spain, they took advantage of lavish funding and low interest rates to prop up their economies. It couldn’t last.
When the credit crunch slammed every financial system into the wall it was revealed that Greece’s public debt was a staggering 130 percent of its GDP. (Britain’s is “only” 76 percent!)
And there was nowhere to turn. Greece, just like the other EU countries, no longer had the luxury of managing its own financial affairs because it was tied into the Euro.
The EU and the IMF had to start bailing out failing countries – Ireland (85 billion), Portugal (78 billion) and Greece (110 billion and now begging for another 75 billion) – but it isn’t enough. The debt runs into trillions and there just isn’t enough money in the EU to shore up the debts.
Austerity measures were deeply resented in Greece and political unrest followed. The gravy train hit the buffers – as we always knew it would – and the result is chaos and anger. Where will it go next?
This is a crucial turning point for Europe. Will the Euro survive as a currency? And if it does not, how can so many countries that have abandoned their national currencies and financial independence go backwards in time?
Will the economic turmoil spread to other countries in Europe? Will widespread hunger, poverty and unemployment have the same kind of consequences that it did in the 30’s?
And in the UK we can only sit on our hands and wait, because if the European Union that we have been foolish enough to join begins to go under, then it will drag us with it.