Interesting post by Ambrose Evans-Pritchard
Spanish revolt brews as national economic rearmament begins in Europe: The Spanish have good reason to feel maligned by North Europe’s self-serving narrative of the EMU crisis. They never violated the Maastricht debt rules. They ran a budget surplus of 2pc of GDP during the boom.
Private credit spiralled out of control in part because the European Central Bank missed its inflation target every month for almost nine years and gunned the eurozone M3 money supply at double the bank’s own target rate to help Germany, then in trouble.
Such a loose policy was toxic for an Iberian tiger economy, flooded with North European capital that it could not keep out under EU rules. Rates were minus 2pc in real terms for year after year, washing over the heroic efforts by the Bank of Spain to contain the damage.
Ever larger political aggregations may suit the ego of individuals, but they often do not serve the interests of the people. The optimal size of a political union will vary depending on circumstances. Both of the potential people in the union and of the rest of the world. A union that is not large enough to ensure its independence risks getting swallowed up. One too large is unwieldy.
The new normal when it eventuates will no doubt result in changed incentives for optimal political unions. The effects of immigration, multiculturalism, birth rates and changes in relative economic and military might make geopolitical changes a near certainty.
There is nothing set about the current mix of nations, their supranational unions or internal composition:
One of Prof Davies main themes is the uncertainty of nations. It is easy to think of today’s European states as the natural sub-units of the continent. But many other forgotten states might have seemed just as natural, if they had only been a little luckier. Another pattern that struck me is the multi-ethnic nature of many of Davies’ states. They were often welded together from a mix of peoples, overlapping in the same physical terrain, but willing to live together in some varying degree of harmony.
The states covered are Visigothic Tolosa, ancient British Strathclyde, the many Kingdoms of Burgundy, Aragon, the Grand Duchy of Lithuania, Byzantium (very briefly), Prussia, the lands of the House of Savoy, Galicia, the Napoleonic Kingdom of Etruria, Saxe-Coburg (birthplace of Prince Albert), Montenegro (lost and reborn), Carpatho-Ukraine (a Republic for but a day), Eire (a newborn state), and last but not least the USSR (freshly and mysteriously vanished). By winding up on the USSR, Davies takes the opportunity to reflect on the inevitability of change. “Nothing lasts forever” and Davies argues that while today’s major states may seem permanent, they too will eventually fade, or change into very different forms.
It is time for the EU to take its place in history …. books. It can not persist through time in its current form.
Graphic courtesy of Europe’s Disintegration Moment