Posted: 07/13/2012 at 7:31pm
Euro Tragedy: Why EU is Crumbling Before our Eyes
It may be only a matter of time before the financial crisis in Europe rocks the rest of the world, including the United States.
So far, European leaders haven't been able to come up with an answer to turn things around.
In Athens, Greece, a homeless shelter is now caring for people who used to belong to the middle class. In Terrassa, Spain, desperate homeowners facing foreclosure are banding together in hopes of somehow not joining the homeless.
You can see the fear on their faces. It is the same story all across the troubled economies in the eurozone.
While European Union leaders keep announcing their next great solution to the eurozone debt crisis, nothing has worked. And many economists predict nothing will work.
Meanwhile, the economies are continuing the crumble.
If it were just Spain that needed a bailout, there might be some hope of saving the euro. But it's also Greece and Italy and perhaps even France. And there is not enough money or political will to bailout all of them.
"The euro as it is now will not survive," German economist Philipp Bagus, author of The Tragedy of the Euro, told CBN News.
"The problem is too high debt, too high deficits. The states are just too big," he explained. "This self-destructive mechanism could have been prevented."
But Europe remains addicted to the problem: a flawed currency, enormous welfare states, and deficit spending.
In Athens, economist Elena Paranitis said Greece's real problem is not a fiscal crisis but a productivity crisis because of heavy government regulations and the welfare state.
"It's impossible to do business in Greece. It's impossible to be a good entrepreneur in Greece," she said.
Support for radical parties is growing in Greece. Paranitis said if going back to the old Greek currency, the drachma, is the solution, the medicine could kill the patient.
"You will have a natural shock of inflation that will create a higher level of stress than this country can take anymore," she predicted.
Critics say the recent and highly touted European Union summit to tackle the eurozone crisis already stands as yet another failure.
Investors have once again pushed Spain's borrowing costs through the roof. Respected economist Nouriel Roubini said in three to six months, Italy and Spain will no longer be able to borrow money at all.
And France could find itself in financial trouble as well. Some analysts wonder if the new French socialist government has gone insane -- chasing business owners from the country by raising taxes on the wealthy and bloating the deficit even further by raising the retirement age.
Meanwhile, E.U. leaders still seem unwilling or unable to do what it takes to stop a crisis that is slowly but inevitably spinning out of control.