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WHY EUROPE HAS MISSED THE OPPORTUNITY: December, 2011

The problem with the Euro Zone, and most definitely western Europe as a whole, is that it has made itself uncompetitive with regard to trade ... and now needs even more money to help the collapsing system to survive.

Europe is a great target for imports, but not such a good originator of cost effective expert sales. This is exactly why Europe as a whole has missed the opportunity for being an economic and political powerhouse. Combine this with a highly fragmented and scattered political approach to global / regional issues and a definite lack of detailed transparency / accountability of European finances – and the image of a forward looking Europe is all a bit of a shambles.

If Europe wants to be a world leader, or even a major world player, it needs to re-establish itself through internal efficiency and external effectiveness – NOT through raising more money to simply “paper over the cracks”, NOT through even greater bureaucracy with even LESS visibility and accountability, NOT through attempting to hide the seriously creaking French banking system.

Let’s take a closer look at how Europe has made itself uncompetitive.

1. to pay for heavy layers of bureaucracy there is high taxation … in those countries organised and accountable enough to systematically collect tax. Those countries incapable of this basic task have found themselves embroiled in chaotic troubles – and having to be bailed out time and time again. So the questions being asked are:

• why should the stable countries continually – and at great expense during times of their own hardship – continually bail out countries that are totally disorganised, inept and in some cases with high levels of corruption?

• is high taxation stifling growth?

• should the UK financial services sector be significantly taxed to pay for European inefficiency?

• just exactly what do the Europeans get in return for funding such a vast empire of unaccountable bureaucracy?

• in an economic environment of rising food costs, why are Europes farmers paid at times NOT to produce, and on other occasions paid to produce more yet the surplus is stored – at great cost?

• why import food – at high cost – when too much is being produced in Europe?

• are and have the EU finances been open to ridiculous abuse – and with no sign of the situation being changed?

• without significant and fundamental change from within the EU, is the Euro a doomed currency?

2. The social security and retirement benefits systems of western Europe often make it more financially feasible for individuals NOT to work. Combine this with the sheer overwhelming cost of social security and retirement benefits, and the financial burden makes any country go weak at the knees. The questions being asked are:

is the European skill base and general work force on a major decline and therefore cannot be relied upon to sustainably contribute to overall growth?

• has the workforce of some parts of the region become lazy?

• are the demands for continually higher salaries continually pricing Europe out of the market?

• are the costs associated with national social security benefits (and EU bureaucracy) crippling some countries?

• are the same social security benefits of some countries being openly and widely abused and is too little being done to control the costs?

• does the system need to be radically reformed in order to propel people back into work?

• has the benefit system created a class of “underachievers” who are continually looking for more, and giving nothing in return?

• does this give rise to a fractured, divisive and ultimately destructive society with increasing resentment at both ends of the scale?

• is this sustainable?

• are European countries so hampered by political correctness that they dare not tackle the underlying issues?

3. Uncontrolled migration across Europes porous borders, and within the region, have given rise to a massive and increasing demographic shift, some reliant on criminal gangs, the sheer extent of which causes severe stress and strain on the localised resources of the receiving nations.  The questions being asked are:

• is this beneficial or damaging? Or is it a dynamic combination of both and therefore how to strengthen one while negating the other?

• are the migrants emerging into Europe for work or to abuse the system? And as above, how does Europe strengthen one while negating the other?

• why is there so much work for migrants yet the internal unemployed state there is not enough?

• does European laziness contribute to the migration pull?

• how will this flow of people change over time?

• what pressures will there be in 5 years?

• will there be a breeding ground for political / religious extremism?

A distinct failure to tackle the above questions, failure to deal with the real issues and the continual focus on what can only be described as politically correct lack of coherent action has led to the case of Europe being engulfed in high costs while at the same time with a shrinking manufacturing base. It has led to Europe being not nearly as productive as it could be, as it should be. And as time moves on, will the situation ever get any better? Is Europe a haven for bureaucrats and the corrupt?

If I was an investor would I want to invest significant amounts of money into European business?

If I was the UK government, why on Earth would I want to sign up to closer European integration at this stage? If I was a European voter I would be asking ... what unelected bureaucrat said I have to pay for all these layers of wastage? For sure, the UK voters shouldn't have to shore up a system teetering on complete collapse.

Regards

JS

If you don't understand the risks, how can you prepare? Can you afford to let the issues be blurred?

The turbulent 21st century

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central@alt3.co.uk