Having spent a two week period in the UK over the Christmas period it seems that my Britannic compatriots are under the impression that those of us living the other side of the channel are undergoing some sort of nuclear winter. What do they picture is going on exactly? Tumble-weed rolling across a deserted industrial landscape? Food rationing? 3 mile queues for bread and potatoes?
The reality is that most people don’t understand what’s going on so are content to place the whole thing at arms length and pretend it’s someone else’s problem. Lending it a snappy taxonomy like “The Eurozone Crisis” keeps the Americans and British under the false impression that they are somehow excluded from it.
The fact is, the crisis that is going on in the Eurozone is the same crisis going on in the USA and in the UK – that of debt, lots of debt, mountains and mountains of debt … coupled with the sudden cold feet of the banks (who got us into this mess in the first place) to lend money at a fair interest rate. To cap it all the Greek, Italian, Spanish and Portuguese economies are being used by market speculators to make a profit, based on a (slightly racist) assumption that the people from these countries are somewhat unreliable at paying their debts.
So what does this mean for those of us in the Eurozone? If you’re in one of the countries affected by severe austerity measures it will certainly be different: wage cuts, a drop in property prices, job losses. This climate however does not translate to France, Germany and the other strong Euro economies. We are living as was before the crisis began – with no discernible change to daily life.
So what’s the worst that can happen? The break-up of the Euro? No, because that won’t make the debt disappear. The collapse of more banks? Very possibly, but not all of these banks will be in the Eurozone. The US and UK are as in as much poo as the rest of us (although the ratings agencies would seem to disagree).
Another possible banking collapse is what the ‘crisis’ is about; and it is being driven along by the fear of another banking collapse; and which country, that relies upon banks for its economy, should most fear a banking collapse? … why the United Kingdom of course!