During a financial crisis, Teddy Roosevelt remarked that “When people have lost their money, they strike out unthinkingly, like a wounded snake, at whoever is most prominent in the line of vision.”
As the debt crisis worsens, Europeans are beginning to exhibit the wounded snake syndrome, with European Bank Head, Christian Noyer, saying Britain’s AAA credit rating should be cut before France’s:
…they should start by downgrading Britain which has more deficits, as much debt, more inflation, less growth than us and where credit is slumping.
Meantime, in Portugal, Pedro Nuno Santos, vice-president of the Socialist Party, was taped at a party dinner calling for diplomatic warfare against the EU’s northern powers:
We have an atomic bomb that we can use in the face of the Germans and the French: this atomic bomb is simply that we won’t pay.
Hey, good thinking. Make those Nazi German bastards pay our inflated civil service salaries and fund our early retirement.
In Lisbon, protesters marched on Thursday denouncing plans by the new conservative government to raise the working week to 42 hours. Wages are being cut 16pc for higher paid, and 8pc for lower paid public workers.
But that’s not enough, apparently. So why don’t they just face reality and cut those public service salaries another 16%?
Why? Because they don’t realize what’s hit them.
The ruling elite just exported the economies of the Western nations to Asia, Africa and the Middle-East where people work for pennies an hour.
China is Europe’s biggest trading partner. Europe imports 282 billion euros a year from China, exporting only 113 billion Euros a year in return. There is a similar huge imbalance in trade with Russia. If it weren’t for the Americans buying tons of French wine, Italian fashion wear and millions of German cars, together worth far more than Americans export to Europe, the Europeans would already be flat broke.
So the idea that Portuguese civil servants can go on indefinitely earning many times as much as Chinese workers, while enjoying incredibly cheap manufactured goods from Asia and Eastern Europe is idiotic.
Enjoying the fruits of cheap foreign labor was possible only during the transition to an Asian dominated World economy, and it was made possible by escalating debt.
Now that the cost of debt service is destroying the European economies, it’s time to get things straight, not strike out unthinkingly at the Germans who at least have the virtue of being exceptionally competent at manufacturing — so much so that they can sell much of their stuff at many times the price of Chinese goods because people really like it.
For Europeans as a whole, the only hope is to acknowledge defeat, adjust wages to what is affordable in the global market and get back to work.