The following is a guest post by Amanda on the differences between how Europe and the US have been handling the economic and debt crises.
Back in 2008, the collapse of the American economy and resulting shock heard round the world was a quick and devastating situation. But within days our government had, albeit without the input of the American people, curbed the crisis with legislative action. While we still can’t figure out who to truly blame for the mess, we certainly have no problem accepting blame for the fiasco. Yes, it was the American inability to find the best home loan for our particular situations that led to the mess we are in, apart from several other American-centered poor decisions made en masse. We made huge mistakes, but we are the first to tell you about them.
Enter the European Union. For the last several months, leaders in Europe have been struggling to curtail an almost certain economic collapse. Meeting after meeting, summit after summit, and so-called agreement after so-called agreement has gotten the continent nowhere. What is basically happening is that Europe can’t decide who to blame – that is to say, which member country for everyone else to rally around and point to and say “That’s who to blame!” Greece is the easiest target, and so far that’s been the point of attack for most other members. But politically it may ultimately make more sense for member states to team up against Italy, who in the long run stands to offer more to the union as far as hopes of helping alleviate the situation is concerned.
At any rate, if you recall the time-line of the 2008 financial crisis in America, the worst parts about it were revealed within days, the largest worries were put to rest within weeks, and the entire problem was outlined and understood as much as possible within months. We’re still trying to figure out how to make the large far-reaching decisions for long-term fixes, but it wasn’t longer than a month before we knew what happened, what caused it, who was to blame.
Members of the European Union are unable to come to these relatively simple conclusions. Instead they are dragging their economic crisis out, every member state vying to be one of the few who can make it out without blame. All the while, stocks continue to plummet around the globe as investors hold their breath while Europe figures itself out. The result is, potentially, more harm coming from their attempts to hold off the crisis as much as possible than would otherwise be incurred if they just went ahead and came clean about the whole thing.
Yet – such is democracy. Europe made the choice over a decade ago to entrust their economic system to a fledgling democracy of nations. It’s truly no different than the American system, except we have the benefit of being “out of many, one”. Indeed, we can accept blame as a whole, and come to conclusions as a whole, without having to fight over who is specifically at fault for what. We can save that until after the crisis is over. Europe can stand to learn a lesson from this; fix the economic problems first, and worry about the petty consequences later.
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True. The US worked through it’s ego problems for the most part when we went from the 13 colonies to a united nation. We actually needed each other to survive. The European countries have a longer history of being separate nations and even enemies. Memories are long; people are proud of their heritage. Some say the EU was formed to try to keep Germany from recurring aggression. France and Germany are supposed to be the big anchors for the EU, but French banks have big debts and the strong German banks hold debts from the rest of the EU they don’t want to take haircuts on. Most EU countries don’t want to lose sovereignty and become a truly united Europe. They’ve backed themselves into a corner & now have to make tough decisions.
Although Europe has a common market for their currency (Euro), it has very little control over the members. I think that is the problem and why they suffer from inaction now.
This was a very simplistic article, and inaccurate in many ways.
The financial crisis was not a simple matter of just “an inability to find the right mortgage loan for our situation.” People looking for clever ways to find a mortgage was just a symptom of a much larger problem that actually created the reasons why people were looking for these creative loans.
Additionally, while there was a quick reaction to stop the bleeding in the US, there has been a tremendous amount of debate and argument about the causes, the guilty parties, and even what should be done to keep the problem from happening again. This argument rages on even today.
The US and EU actually have very little in common, so this kind of comparison is pretty pointless.
I see some similarities that don’t always seem obvious. For instance, the EU has many member states with varying degrees of “responsibility”. Isn’t that kind of similar to how Florida, Nevada and a handful of US States were largely responsible for the majority of housing crash losses – which then required mass bailouts and (ultimately in the future), tax increases to pay? Someone living in the midwest should be pretty pissed right now that their federal tax dollars are funding irresponsible lending and debt control by states on the coasts, right? This is a decent parallel to Germany and the EU, right?