04 May 2010

The Decline of Europe: The Next 40 Years


According to the Spanish language blog Venturatis, the fortunes of Europe will fall drastically over the next 40 years -- largely due to its imploding population. If there are no people, there can be no significant economic activity. Hence, the decline and fall of a once great continent.

According to these projections, the world of the future will be a largely bipolar world, with the US balanced by a wealthier China. India and Brasil will also make significant contributions to the world economy -- with Mexico, Russia, and Indonesia trying to keep up.

Most European nations are so far down the chart by 2050 that it becomes difficult to find them. Demography is destiny in far more ways than the modern PC-neutered dieoff left can ever let itself acknowledge.

The runup of US national debt under Obama - Pelosi has genuinely ominous overtones, when one contemplates the fate of smaller -- though barely less responsible -- nations in Europe. Europe has been borrowing against future generations that are not being born. In the US, the future generations being borrowed against will be born -- but perhaps they will wish they hadn't been.

Unsupportable debt is a genuine killer for a national economy. As long as richer nations exist, who can bail out the weaker indebted nation, it remains possible to strive for some type of recovery and normalcy. But if the richest nations themselves become mired in unsupportable debt, there is no bailout. Without a sudden (unlikely) attack of discipline, there is only a growing turbulence of inflationary and deflationary forces, accompanied by increasingly corrupt government and the inevitable (?) path to revolution or civil war -- perhaps lasting for decades.
The banking crisis has turned into a crisis of entire nations, and the subprime mortgage bubble into a government debt bubble. This is why precisely the same questions are being asked today, now that entire countries are at risk of collapse, as were being asked in the fall of 2008 when the banks were on the brink: How can the calamity be prevented without laying the ground for an even bigger disaster? Can a crisis based on debt be solved with even more debt? And who will actually rescue the rescuers in the end, the ones who overreached? _Spiegel
Whoever rescues the deluxe retirement home that once was Europe, will have no one around later who is willing and able to rescue them in return. And yet there is no sign of an awakening of economic common sense in the PIIGS states of Europe, or in the Obama - Pelosi regime of the US.
The US budget deficit has now reached $1.6 trillion, or 10 percent of GDP. The national debt is now over $12 trillion and is forecast to expand to more than $20 trillion by the end of the decade. At that point, Americans will be paying $900 billion a year in interest alone...Today, only four areas consume almost all government revenues: defense, social programs, health care and interest on debt. Americans must pay for everything else with new debt. _Spiegel
Things will simply have to keep getting worse until enough people awaken to the dire straits they have gotten themselves into. At that point, the meaning of the word austerity may become clear to many decadent westerners (of all income levels) for the very first time in their lives.

And lest you think that perhaps a super-wealthy China will be able to prop up the formerly great nations suddenly sinking into debt and demographic decline -- better think again.

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“During times of universal deceit, telling the truth becomes a revolutionary act” _George Orwell

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