Tuesday, August 25, 2009

The Fall of Europe

Europe has become economically weak. France,
the Dutch, and Belgium have been weak economies
and remain weak. Since WWII Germany has been
the economic powerhouse. Now, however, Germany
has become a weak economy; the "economic wonder"
of Europe is no more. Some of this decline began
with German re-unification in the 1990s. West
Germany was advanced; East Germany economically
retarded and dependent. German welfare is another
reason. Germany has the world's highest labor
costs. Another problem is the the large immigrant
labor coming in from Italy and the Balkans. Also,
the German birth rate has been very low with the
resultant lack of purchasing power. The German
bubble is bursting.

Moreover, because of the economic disaster between
the two world wars, Germany has had an obsession with
strong money. The result has been the development
of a very disciplined financial economy. This benefited
Germany until now. To be sure, Germany produces the
best luxury cars, and the trains run on time. German
engineering standards are the best in the world. The
problems now is that most people don't care. Who needs
German Mercedes when Japan and Korea are producing
superb luxury autos? The world has changed from the
Germany 1950-2000. Germany cannot compete with mediocrity.
But, mediocrity is the name of the game now.

Germany and Europe are becoming the "has beens" of the
21st century. European countries are small and have no
population base to sustain thriving economies. The people
are old, and there are no demographics that point to any
real European economic recovery. European birth rates are
low and so low there is doubt Europe can retain its culture.
The European Union is an attempt to stem this problem, but
it is not working. The United States had better learn from
the European economic collapse or face a similiar decline.
Germany and Europe are on the road to permanent recession.

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