If you think American politics is hopeless and our economy stagnant, take a look at Europe. Their leaders can’t decide whether to produce a comedy, a drama, or both.
The latest act took place in Italy. An election last week ended with a four-way tie. Italy, never known for governmental stability, seems to be reaching new depths — or heights, depending on your perspective.
Thanks to support from young voters — and a startling number of older people voting for the first time in their lives — comedian Beppe Grillo’s “Five Star” movement is now Italy’s largest political party. The results should surprise no one. With youth unemployment at 27 percent and wealthy neighbors like Germany demanding austerity, Italians are ready to try anything.
This political problem is really a banking problem. German banks loaned staggering amounts to the so-called “PIIGS” nations (Portugal, Italy, Ireland, Greece and Spain), which then used the money to buy German exports and stimulate their own economies. Now the PIIGS can’t make the payments. But if they don’t, the German banks will be bankrupt.
Almost everything you hear about the “Euro Crisis” is an attempt to postpone the inevitable. Greece, Italy and the others simply can’t pay their debts. Calls for government spending cuts aren’t entirely misplaced; wasteful spending and corruption is rampant in the debtor states. The citizens who now resist austerity didn’t complain in the good times.
Yet the lenders — banks and bondholders — also failed. They knew the risks. Now they want to be bailed out, protected from the consequences of their own poor judgment. In sum, everyone is wrong.
I don’t have a solution for Europe, any more than I have one for the United States. We obviously have our own problems. Grillo can hardly be worse than the serious intellectuals who created the whole mess. Maybe we should take a hint and try the same over here.
© 2013 Moneynews. All rights reserved.