Waterboarding Greece is the Start of the End

Well Greece has its bailout plan. Germany hammered its fist on the negotiating table and said enough is enough.

You either take what we give you or nick off out of our European Union. That’s basically how Germany put it to Greece.

And after all the chest puffing from Greece over the last few weeks, they gave in. Just like that.

This has angered pretty much all of Greece. Remember just under two weeks ago there was a referendum in Greece. The people Tspiras is supposed to represent gave a resounding ‘no’ vote.

The bulk of the Greek people said no more austerity. But even after the referendum, the current Greek government has bowed to its master and commander, Angela Merkel.

It’s quite an about face from Tspiras and the Syriza party. Remember the ‘far-left’ Syriza only came to power in February. The groundswell of support was huge. But oh how quickly things change when money’s involved.

Speaking to ANT1 TV on Monday, 13 July 2015 Nikos Filis, a spokesman for the Syriza Party, spoke his mind on the matter. According to Filis, Greece is being ‘waterboarded’ by the European leaders.

The thing is, the situation in Greece is starting to become uncomfortably reminiscent of Weimar Germany circa 1930. Of course Greece will never descend into what followed 1930. They don’t have the military for it.

Nonetheless, the Greek situation does lead us to ask the question. Does the EU work? And probably an even better question, should the EU work?

Or perhaps, as I see it, this waterboarding of Greece is really the beginning of the end for the European Union.

What have you done for me lately?

Here in the UK there’s a growing swell of opposition to the EU. And it’s likely the UK will hold a referendum about it. It very well may determine whether the UK stays in or leaves the EU.

It doesn’t help when countries like Greece get into trouble and the EU comes knocking for cash. I was talking to a retired Englishman in a pub last week. And the general feeling is, what has the EU done for the UK lately? This isn’t the first time I’ve come across this kind of view. Almost every ‘average’ person I talk to feels the same.

Now I’m not here to argue the UK and the EU’s relationship. But Prime Minister David Cameron did say something interesting about the Greek situation on Wednesday.

Speaking to the British Parliament Cameron said,

‘It is not for Britain to bail out Eurozone countries.

‘If Greece were to leave the euro and wanted humanitarian assistance, I am sure that [the House of Commons] and the British public would take a more generous view.

‘Sorting out the problems of the Eurozone, which we’ve always warned about, is a matter for Eurozone countries.’

Now correct me if I’m wrong, but isn’t David Cameron basically telling Greece to leave the EU?

Leave the EU and we’ll probably help you out more. Or you can stay and we’ll watch from afar as you become Germany’s flunky.

In all fairness maybe Greece should leave the EU. Maybe they’d be better off. Perhaps Cameron’s speech was saying that this ‘union’ isn’t working. And maybe it’s time for everyone to get a divorce. Perhaps then they’ll all be better able to really help each other.

To get married after a fight is the worst relationship decision ever

The origins of the EU were from the aftermath of the Second World War. After the world’s biggest fight the EU decided that the whole area should get married.

Imagine two young people having the biggest fight of their lives. Things were said, items thrown, the kind of fight you look at and say, ‘What a horrible couple.’

Now imagine the next day those two get married. Creating a union for the sole purpose to avoid conflict. After the biggest row in history it’s naive to think it’ll all be rainbows and unicorns.

In real life you’d never become interdependent just to avoid conflict. If anything, you’d stay well away from each other.

But the EU thought that getting hitched was the best way to bring everyone together. Well the honeymoon’s over kids. Reality is most of the EU actually hate each other…still.

The EU’s own website explains their daft idea for union,

‘The idea [behind economic cooperation] being that countries who trade with one another become economically interdependent and so more likely to avoid conflict.

‘What began as a purely economic union has evolved into an organisation spanning policy areas, from development aid to environment.’

I think they’re missing the point. You can lock two people in a room who hate each other and they’ll talk. But when you let them out they still hate each other.

Creating a union to avoid conflict was never a good idea.

The EU is simply destined to fail. Aside from the sheer cultural and historic reasons there are simple economic reasons this thing was never going to work.

Remember last week I outlined the Economic Ashes? Well let’s look at GDP per capita again. But let’s apply it to the EU.

Eurostat has the statistics on the EU area for GDP per Capita. And it tells a fascinating story.

The figures are in euros and from 2014.

The EU area (28 countries) = 25,800

Belgium = 33,800

Germany = 33,100

Greece = 17,000

Spain = 22,700

Italy = 25,300

Netherlands = 37,900

Poland = 10,500

Portugal = 16,200

Sweden = 40,400

As a point of comparison they also list the United States = 38,500.

By looking at the GDP per capita figures it’s pretty easy to see that you can’t take a one size fits all approach. Greece has its troubles. But compared to Poland and Portugal they’re practically AAA rated.

Of course these troubled nations are tiny on the grand scheme of things. Remember, Greek debt is a bit less than 1/17th the debt of the US. But hey, who’s keeping score?

What I’m saying here is pretty simple. I don’t think the EU is going to last. That’s right, I think that the EU will disband. It will fragment, fall out, kick some out, and some (like the UK) might just simply walk away.

It’s not going to happen this year. It might not even happen next year. But within the next 10 years the EU as we know it will cease to exist.

There will be remnants of the EU, such as free trade agreements and freedom of movement. But the single currency is on borrowed time. Shuffling EU bailout money from one desperate country to another will end.

And countries like the UK, Netherlands, Sweden, Norway and eventually Germany will simply get sick of fixing the messes of other countries.

It will be the biggest divorce on earth, but at least once they’re separate each can start to get on with their lives again.

Regards,

Sam Volkering

Editor, Money Morning