The financial sector now takes it for granted that the euro-zone—and thus the EU itself—is doomed

Kristor writes:

I thought it was interesting that discussions on Wall Street of the impact of the coming break-up of the Euro-zone are now far enough along that they are holding public conferences on how to deal with it when—not if, when—it comes.

Here is the invitation that Kristor received and forwarded:

Capital Economics invites you to a special conference. Please find the details below.

Capital Economics Special Conference

The Euro-zone Break-Up
- How will it happen? What impact will it have
Tuesday 17th April 2012
At the Hilton Hotel, 1335 Avenue of the Americas, New York, United States, 10019

08:30 Coffee & registration

09.00 Chairman’s introduction
Jonathan Loynes, Chief European Economist

09.05 Why and how will the euro-zone break up?
Jonathan Loynes, Chief European Economist

09.20 What will a break-up involve?
Jennifer McKeown, Senior European Economist

09.35 What will be the economic and financial consequences?
Ben May, European Economist

09.50 How will the US cope with a euro-zone break-up?
Paul Ashworth, Chief North American Economist

10.05 Questions & discussion
10.30 Coffee & close

LA to Kristor:

Amazing! In the midst of so much bad news, this is music to my ears.

Kristor replies:

I know. It’s like, this is going to happen, here’s what you need to do to be ready.

LA replies:

I thought of writing a fictional version of that program, about an establishment conference about the inevitable end of the Western liberal regime, and how to prepare for it.

- end of initial entry -

Gintas writes:

Did you look at the times of the talks?

09.35 What will be the economic and financial consequences?

Ben May, European Economist

09.50 How will the US cope with a euro-zone break-up?

Paul Ashworth, Chief North American Economist

Fifteen minutes for “What will be the economic and financial consequences?” That’s just enough time for five PowerPoint slides:

How to relocate overseas, best places

Staying put: How to turn your neighborhood into a fortress

Saving your wealth: Best offshore “investments”

Armor-plating Your Prius (or “There goes my gas mileage!”)

SPLC Bonus: Start your own cottage industry blaming Whites and Christians

LA replies:

I did notice that, after I posted it. It’s very odd. I never saw such a conference. And the whole thing is over in three hours.

Kristor writes:

I just saw Gintas’s (very funny) comment. I would respond that, while the breakup of the EU would be a massive dislocation, and might even lead to a war here and there (here in the Balkans, there in the Balkans, perhaps a quick bloodbath in Cyprus), still the net effect, in a relatively short amount of time after the dissolution of the European Union, could be a European boom. Certainly the end of the EU would mean that the peoples of Europe would overnight be much better adapted to reality than they are now, with the multiple layers of bureaucratic lies and pretenses imposed upon them by Brussels. They would be free again to determine their own individual policies, and that much more quickly.

To see how big a boom it could be, imagine how the U.S. economy would take off if the entire Federal bureaucratic apparatus simply dissolved. I mean, it would be huge, right? It would be so huge, the mind reels. We are devoting about 40 percent of our labor force to compliance activities of one sort or another, and it is much worse in Europe. What if all those people lost their sinecures and were forced to get real jobs? It would take a few years to make the adjustments in labor allocation, but the new baseline jump in real GDP would be staggering. It would be the way it was in the 19th century for the Anglosphere.

The conference I was invited to will be about more than how to insulate your firm and your clients from the chaos and turmoil that will be the immediate aftermath of the collapse of the EU. It will also be about how to make money on the new situation in Europe, post-EU. That is, it will be about how to allocate capital so as to facilitate all these changes.

The collapse of the EU could be the best thing that has happened since the fall of the Berlin Wall. Without their sinecures, all those bureaucrats and Affirmative Action beneficiaries would be forced to confront the real world, and a significant number would abandon the leftist utopian fantasies their sinecures have enabled. It is jejune to think that they would all become pious traditionalists overnight. Some would. But many of them would become ardent nationalists, and we could see a lot of anger at immigrants. Visualize lots of NY Times articles using the phrase “European jingoism.” It would certainly put the kibosh on all talk of allowing Turkey to be part of Europe.

Finally, this—oh, this precious, precious thing: it would be a massive body blow to the utopian presumptions of the European left. Quite apart from their affection for their sinecures, the reason the members of the European bureaucratic class have fought so tenaciously to preserve the monetary union is that the EU, in all its aspects, is a socialist project. The elite of Europe believe in this stuff, they care passionately about it. This would be as big a blow to them as the fall of the Berlin Wall. It won’t be the end of the siege; it would be only the collapse of one of their battlements. But it’s something, right?

P.S. The reason the seminar is only three hours is that it is a teaser. It is meant to entice the attendees to urge their employers to pay large consulting fees to the conference sponsor to learn the real nitty gritty. So, we can pretty much expect that the five PowerPoint slides each presenter discusses will be pretty arresting, full of really startling factoids that you will not have heard about from the media.

On the other hand, it could all be recycled stuff that the right wing blogosphere has been discussing for the last couple years, but that the liberals who work on Wall Street will find absolutely earth-shattering. Hard to say.

And—I just looked at the schedule really carefully for the first time—it’s not over in three hours, it’s over in 1.5 hours!

Jason R. writes:

The economic case for a breakup of the Euro is pretty unanswerable but the real issue is how it will actually unravel given how much political capital Europe’s leaders have invested in supporting it. Geert Wilders could be an important catalyst.

Talking of whom, there was a recent Financial Times piece saying that issue of Islam is gaining less traction in Dutch politics and that Wilders is consequently turning his attention to the public disquiet at immigration from East Europe.

D. Edwards writes:

You might find this of interest:

“The Dutch Freedom Party has called for a return to the Guilder, becoming the first political movement in the eurozone with a large popular base to opt for withdrawal from the single currency.”

LA replies:


March 6

Timothy A. writes:

While it seems to be likely that the euro-zone will not survive in its present form, it seems much less likely to me that the EU and its institutions (European Parliament, Court of Justice, etc.) will be going away any time soon. I can see four scenarios arising from the present crisis of the peripheral European countries:

1. The EU and its institutions dissolve, Europe returns to pre-Treaty of Maastricht (1993) or even pre-Common Market (1957) status.

2. Some or all of the member states of the EU drop the euro in favor of their previous sovereign currency, establishing the same type of relations with the other member states that (e.g.) Sweden and the UK now have. Note that the report which led Geert Wilders to call for a return to the guilder compares Sweden favorably to Holland in terms of economic growth. In this scenario, the European Central Bank loses importance, but other EU institutions retain theirs.

3. Nothing changes and the members of the EU somehow muddle through this crisis with financial transfers from the core to the periphery.

4. Tighter integration. Fiscal transfer union, national sovereign debt replaced by eurozone bonds, etc. This scenario increases the power of all EU institutions.

Of these four scenarios, number one seems to me to be by far the least likely. First, because it does the most damage to the groups (politicians and bureaucrats) who will decide the path to be followed, and second because there is still a large reservoir of good feelings towards some form of cooperation among the European populations, though possibly not towards the EU as it now exists.

LA replies:

Good points. I should have said (which I said in draft form, but, in a moment of over-enthusiasm, changed in the posted version) that the end of the euro means the end of the EU project, not of the EU itself. The EU project aims at total integration. However, an EU stripped of its project means a much reduced and less harmful EU.

Posted by Lawrence Auster at March 05, 2012 05:14 PM | Send

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