Europe at the crossroads

Sergio Marchionne, the chief executive officer of automakers Chrysler and Fiat, was speaking to reporters recently and said something about the economic challenges in Europe that caught my attention. As we've been reading in the news, the concept of European union is at a critical stage. Talking about the looming debt issues, Marchionne made the observation that while both Europe and North America desire unity in their respective regions of the world, they've adopted separate paths towards that end. Europe, faced with many national differences, decided to first establish a strong shared currency (the Euro), hoping that the single currency and its benchmark economic requirements would eventually lead to political union. But those requirements of monetary union and the differences between national economies now risk tearing Europe apart.

Marchionne noted the North American model is different. Canada, the United States and Mexico first negotiated a free trade agreement. They chose to not bind national currencies together. The value of the currencies has been free to float. As a consequence, political union, if desired and possible, could be developed as a separate phase. Countries have been freer to pursue their own policies. Specific national economic issues to date have not been a grave threat to the agreement.

Financial observers say that many of the world's nations have been living too deeply in dept for too long. Now Europe faces significant social and economic upheaval, as Greece is forced to make great sacrifices to enact an austerity plan that threatens its social fabric. The global downturn of 2008-09 may only have been the first phase of a continuing crisis. All eyes are on how the European Union and the world's bankers are tackling the big challenges of this latest financial dilemma.


Notes:
Der Spiegel magazine offers a detailed portrait of the economic situation in Europe. See Huge National Debts Could Push Eurozone Into Bankruptcy.

Unemployment numbers spell trouble

As the stark unemployment numbers came in last week, the seriousness of the economic downturn sunk in. What began as a mortgage crisis in the United States last year, then suddenly morphed into a global financial crisis in the last quarter, then a manufacturing crisis, with the auto sector on the brink of collapse, now threatens to become a human crisis.

As more manufacturing slows down, more people are being laid off. As the numbers of the unemployed grow, all sectors of the North American economy are being affected: retail, the services sector, travel, etc. (In my industry, television, we've seen a drastic reduction in advertising revenues, and media companies across the board have started terminating positions as revenue projections for the rest of the year are not improving.)

Meanwhile in both Canada and the United States, governments are just starting to pass stimulus packages. Will they achieve the desired effects in time? Everyone is going to be watching the economic numbers very closely. Meanwhile, families worry about making ends meet and hope for a glimmer of positive change, or at least that this steep dive will level off.

The bankers and Wall street brokerages that unleashed all of this have a lot of cleaning up to do.

Bill Moyers, the venerable journalist and documentary producer, talked about this problem on his show (Bill Moyers Journal) this weekend by recalling an earlier personal experience. Here's what he said in his closing commentary:

I had a history professor at the University of Texas - Robert Cotter - who believed the most remarkable quality of Abraham Lincoln was his empathy for people he didn't personally know. The working man. The soldier in battle. His widow and orphans.

Ordinary folks caught in the undertow of events. We could use that kind of empathy today. As Washington obsessed all week over the fate of one nominee to the cabinet, and as we watched hearings about the failure of watchdog agencies going to sleep on the job, we heard almost nothing of the people across the country suffocating in the wreckage of their lives. Some of us born in the Depression still remember the song made famous by the Carter Family singers, called the "Worried Man Blues".

"I went across that river and I lay down to sleep. When I woke up there were shackles on my feet."

The day my father was fired from his job at Manly's Appliance Store, he came walking home as if he had shackles on his feet. I still remember the look on his face. He wasn't yet 50, but had suddenly turned old, the way a lot of people look today who are losing their jobs. Their stomachs are knotted with fear as the life they had come to expect is fading fast. Not because of their own failures but because our political and financial elites rigged the economy for their own advantage.

John F. Kennedy famously said, "Life is unfair," and so it is. But it wouldn't feel as unfair if the shackles wound up instead on the well-heeled feet of Wall Street and Washington's elect. That's the change we need, the change we can really believe in.

Notes:

Read more at this PBS site for the Bill Moyers Journal. Much of the show this week was devoted to a new look at Abraham Lincoln.

Stock image courtesy of Ilko at www.sxc.hu

-----------
>To send to a friend, click on the envelope icon.