I’m So Tired of Europe

hu·bris

noun
  • excessive pride or self-confidence.
  • (in Greek tragedy) excessive pride toward or defiance of the gods, leading to nemesis
Who doesn't want to love this place? AMIRITE?

Who doesn’t want to love this place? AMIRITE?

I love Europe. I love it’s culture, its cities and architecture and the pace of life. I think in many ways Europe seems more usefully progressive, with things like public transportation and even energy. But god I am tired of hearing about Europe. Since the beginning of the financial crisis Europe has become the wounded, but never dying, member of some ill fated expedition. Every time the expedition seems likely to escape their fate, Europe goes and breaks an ankle…or something.

gdp-growth-in-eurozone-japan-and-us-2008q1-to-2014q31

From an investment standpoint Europe makes a lot of sense. It’s the largest economy on the planet. It’s highly industrialized and very productive. It has created one of the largest economies by knocking down trade and exchange barriers between nations. It has many multi-national firms, advanced R&D, and exports much to the rest of the world. And yet it constantly represents a problem for investors.

I believe the source of that problem may be hubris. There’s not a lot of science around that statement, there is no Hubris Index to track (although that would be neat!), nor is there some ratio to calculate. But there is a pattern of behavior that seems to lend itself to such an analysis.

Caricature_gillray_plumpuddingWe should be clear though, you need hubris to do great things. Name a nation that has attempted to reach beyond it’s grasp and risen to great military and economic might and you will uncover a great deal of pride and arrogance. But something must temper that pride or what could have been great becomes the next Greek crisis.

Europe’s problem is that it seems to have little regard for the inner voice that advises caution. The Euro Zone, initially an economic endeavour to improve financial and diplomatic ties (the belief is that trading partners don’t go to war with each other) has spilled out into a messy, difficult and byzantine organization that has had a difficult time following it’s own rules. It has rapidly expanded into new markets, making it’s non-EU neighbors (like Russia) nervous about it’s intentions. It has turned countries with no business being part of the EU into powder-kegs ready to disrupt the whole experiment.

Ya, this isn't a joke. This is a real law that real people spent real time making.

Ya, this isn’t a joke. This is a real law that real people spent real time making.

Europe has lots of problems, but almost all of them are their own making. Greece may have borrowed the money that exploded their debt, but French and German banks lent them that money. Concerns that a Greek exit from the Euro could trigger a domino effect as deeply indebted nations choose default over austerity is also the  result of hubristic action. Countries like Spain and Ireland were hit with austerity because the government bailed out the banks, not because the government had mismanaged their finances.

Dumb EU 2

Europe’s desire to expand the mandate of the EU from economic integration into integration has also eroded a great deal of natural support. Exhausting, silly and pointless rules have caused nothing but ire within member states, and attempts to push through a new constitution within Europe were met with such local resistance, the whole things has been on hold.

All of this reeks of arrogance and overreach. But Europe has done this to itself, and the more we continue to hit regular road bumps on the road to financial well being, the more it looks like Europe is undoing it’s own purpose. It’s no surprise then that the economy that has recovered the quickest from 2008 has been the one supposedly worse hit. The United States has remained the foremost place for investors, safer, faster growing and more profitable than Europe. Europe, who is still dealing with the same problems of five years ago.

I’m so tired of Europe.

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