5 March, 2015
Historically the lands of “Old Europe” have always been at war with each other – from the Vikings to the Roman Empire, to the days of the Austro-Hungarian Empire and to the latter day wars of WWI and WWII. Until quite recently, the Europe of old had enjoyed its longest period of military peace, since WWII; starting with the civil war – leading to the break-up of the former Yugoslavia and now the civil war in Ukraine.
The term, “Old Europe,” is largely attributed to former US Secretary of State, Donald Rumsfield, in 2003, in which he used it as a term to describe European countries, which did not support the war in Iraq...namely Germany and France.
According to Wikipedia, the expression was interpreted as a dig against a “sclerotic” and old-fashioned Western Europe. It became a potent symbol, especially after division emerged over Iraq between France and Germany and some of the new Central and South-eastern European entrants and applicants to NATO and the European Union.
Rumsfeld would later claim his comment was “unintentional,” and that he had meant to say “Old NATO” instead of “Old Europe;” during his time as ambassador to NATO, there were only fifteen alliance members, and France and Germany had played a much larger role than after the admission of many new (particularly Eastern European) countries. Nonetheless, he claims he “was amused by the ruckus” when the term became debated.
Further diplomatic tension built up when Rumsfeld pointed out in February 2003, that Germany, Cuba and Libya were the only nations completely opposing a possible war in Iraq (a statement that was formally correct at the time). This was interpreted by many that he would put Germany on a common level with dictatorships violating human rights.
Outside of Rumsfeld's usage of “Old Europe,” the term “New Europe” (and neues Europa) also appeared, indicating the European states that supported the war. I.e. The Central European states that had been newly accepted to the EU: or a new economically and technologically dynamic and liberal Europe, often including the United Kingdom.
Rumsfeld made fun of his statement shortly before a 2005 diplomatic trip to Europe. “When I first mentioned I might be travelling in France and Germany it raised some eyebrows. One wag said it ought to be an interesting trip after all that has been said. I thought for a moment and then I replied:” ‘Oh that was the old Rumsfeld.’
However, Karl Marx also used the term, “Old Europe” in 1848, the year of The Failed Revolutions across Europe; he was referring to the restoration of Ancien régime dynasties, following the defeat of Napoleon.
Of his three sets of pairs, each pair links figures, which might on the surface, are considered adversaries, in alliances that he clearly sees as unholy. An “Old Europe” must find a mental contrast with a posited “New Europe”
American comedian and TV host, Jon Stewart, on “Old Europe”
In his satirical 2004 book America (The Book) Jon Stewart describes Old Europe (United Kingdom, Germany, France, Italy, Spain, Portugal, Netherlands, Belgium, Luxembourg and Switzerland) as follows:
...Old Europe, a once-dominant region now reduced to sucking at the geopolitical teat of [America]... they spent the better part of the last millennium conquering the world and taking the good stuff home with them... And what do they get for their troubles? Ungrateful colonies demanding their independence. And, after you taught them how to play cricket!
They've banded together to form a powerful coalition - the European Union - that will once again propel Europe to its rightful place amongst the world's most powerful... Wait, where's Belgium going? We wanted to show you the new logo...
Europe – either old or new, has always been right at the heart of the international forex market, even before it became known as forex. Italy was the home country of the world’s first ever bank and the banking dynasty, the Rothschild family have very long and deep European roots – to name but two examples.
However, after nearly fifty years of relative peace, between the EU member states – wars are now breaking out; both militarily...as in Ukraine and with a war of words between the new Greek government and the EU over Greece’s debt to the Troika, which is the EU, the International Monetary Fund and the European Central Bank.
The political parties of Spain and Portugal are watching this new boxing match very closely; as the majority of these countries citizens have also had enough of the so-called Germany –imposed austerity measures – following the 2008 financial crisis, with Catalonia seeking independence from Madrid and even Venice, quite possibly, seeking independence from Rome.
Bloomberg reports that the Ukrainian economy is all but kaput, thanks to its on-going civil war, between the eastern and the western parts of the country. As the economy deteriorated, the hryvnia has sunk 70 percent in the past year, the most in the world, sparking panic in some towns.
While the official inflation figure is 28.5 percent, annual price growth may be as quick as 272 percent, with a monthly rate of 64.5 percent that would be qualified as hyperinflation, according to estimates based on the hryvnia’s black-market price by Steve Hanke, a professor of applied economics at Johns Hopkins University and director of the Troubled Currencies Project at the Cato Institute.
The prospects for the future don’t look rosy. While the government is racing to obtain emergency cash from a $17.5 billion International Monetary Fund, central bank reserves are at the lowest in more than a decade and Russia is threatening to cut energy supplies for the second time since the crisis began. Officials suggest the economy may post small growth in 2016.
Back in Kiev, those familiar with the city can spot something is awry. The traffic jams that have dogged commuters for years have dissipated in tandem with the spike in fuel costs, with the hyrvnia’s drop more than offsetting weaker global crude prices. Hoarding of imported food and drugs began in some places Wednesday as the hryvnia hit a fresh low.
“It was difficult in the 1990s but we got independence and we had hope,” said Lozova, the accountant. “Now I’m afraid of full-scale war and I don’t see any prospects.”
Bloomberg goes on to report that Ukraine has now become the fourth most miserable nation on earth in which to live. “In Ukraine's case, war will exact greater economic casualties. Tension with Russia-backed rebels will prolong joblessness in the eastern-European nation, and inflation won't offer much relief, the surveys showed. The one-two punch means Ukrainian consumers are set to be the fourth-saddest among 51 economies (including the euro area) based on forecasts for the misery measure. Adding to the agony is the relatively abysmal income growth that will fail to cushion Ukrainian households against the still-surging prices. At $8,494 gross domestic product per capita this year, Ukraine only edges out the Philippines among the countries surveyed and measured with the International Monetary Fund's proxy for resident income.
Unemployment probably will climb to 9.5 percent in Ukraine this year from its 8.9 percent rate as of the third quarter in 2014, the survey data show. Inflation is projected to rise at a 17.5 percent pace in 2015, compared with the 24.9 percent December year-over-year rate.
The depressing expectations for Ukraine still aren't quite as bad as what the embattled nation faced in 2014, when it finished second in the misery index.”
Five years after investors popularized the term “PIIGS” to describe a handful of European countries with bloated budget deficits, four of those five countries remain in dire straits, according to their projected misery indexes.
PIIGS is an acronym used to refer to the five eurozone nations, which were considered weaker economically following the financial crisis: Portugal, Italy, Ireland, Greece and Spain. Since the nations use the euro as their currency, they were unable to employ independent monetary policy in order to help battle the economic downturn.
On May 10, 2010, European leaders approved a 750 billion euro stabilization package to support these nations. The economic troubles of the PIIGS nations reignited debate about the efficacy of a single currency employed among the eurozone nations. Critics point out that continued economic disparities could lead to a breakup of the eurozone. In response, EU leaders proposed a peer review system for approval of national spending budgets in an effort to promote closer economic integration among EU member states.
Greece is, according to Bloomberg, 5th, while Spain is 6th, Portugal is 10th and Italy is 11th in this year's ranking, of the most miserable countries to live in, though each show about average projected income levels relative to survey peers. (Ireland happily sits further down the chain at No. 16 in the misery ranking and with a much-better-than-average GDP per capita of $48,787. The 51 economies in our misery index average GDP per capita of $31,079.)
The current euro crisis sweeping Greece has even had a knock on effect in Denmark, with Danish opposition to joining the euro rose to a record high as the currency bloc’s debt crisis made voters favour the krone, according to a poll published by Danske Bank A/S.
Although Greece has now secured a bridging loan for its debts it still has a long, hard road to go before it ever is likely to become solvent again. However, one thing for certain is this...the Greek people have had enough of the EU and Germany-led austerity measures foisted upon them.
Leopards do not change their spots
The very concept of the idea of the EU and the euro was to being about harmony and a feeling of “togetherness” on the European continent – after so many hundreds of years of years of fighting each other and of the constant changing of the boundaries of countries borders and territorial controls, as a result of these wars.
However, the reality is that New Europe of today is as fragmented today, I suggest, as it ever has been from the Europe of old. There are disparities of lifestyles and cultures; as well as the countries of Europe’s geographical locations, which constitute...and are key to these very lifestyles and cultures into which people are born into, live and work.
The war of “Old Europe” continues unabated into the Europe of the new – albeit it without countries, so far, launching full scale military attacks on each other. Rather, however, this battle is a different battle...it is a battle of the individual EU countries economies of not just the eurozone countries, but of other EU member states outside the eurozone.
Therefore, as far as all of this is concerned...leopards do not change their spots. The political in-fighting in Europe continues. Therefore, the big question now is...how does this all eventually end?
by Victor Romain
The U.S. is taking the trade war with China to a new level when President Trump stated he is considering imposing export controls on high-technology exports...
The EU is working on legislation to allow screening of foreign direct investments as a measure to address security concerns related to investments by China...
A subdued USD demand helps build on this week's rebound. Improving risk sentiment does little to prompt fresh selling. US-China trade optimism/Fed rate hike...
Investors have gone from contemplating the prospect of oil at $100 to sub-$50 in less than two months. No wonder global markets are playing catch-up....
Monday was a hard day for the financial markets. American DJI lost more than 2.3% and S&P500 decreased by 2.0%. As in previous weeks, the main pressure...
Reinforced expectations over higher interest rates in the United States after the Federal Reserve provided a consistent narrative that policymakers...
Slowdown in the UK property market and uncertainty surrounding UK's exit from the EU hit the housing market hard in October. The RICS House Price Balance...
Europe might ignore U.S. sanctions on Iran after France's Economy Minister moves forward with plans to defy oil sanctions and to improve the international...
Following the RBA, the Reserve Bank of New Zealand (RBNZ) will be next to decide on monetary policy this week. As their Australian counterparts...