The EU Crackup

Llewellyn H. Rockwell, Jr.
Lew Rockwell

Political upheaval has hit Finland, and it’s merely a foreshadowing of bigger changes ahead. The core issue is whether Finland ought to be paying for bailouts for other EU states. In reaction to establishment support for the bailout, voters ousted the pro-bailout ruling party and gave an upset victory to the bailout-critical conservative party. Against every expectation, the eternal rule of the social democrats is at an end.

But most striking of all are the gains made by a previously invisible party called True Finns. This is the only party to take a hardcore position: no bailouts at all. It also so happens that this party is predictably nationalist on issues of trade and immigration. But that’s not the source of the appeal. The bailout is what is on everyone’s mind. And you know that the anger must be palpable if it fired up the usually sleepy world of Finnish politics.

In the sweep of history, few issues are as politically volatile as tax-funded bailouts of foreign countries, especially during difficult economic times. It’s a policy that provokes dramatic political change. The 20th century’s most famous case was in interwar Germany, when nationwide resentment against payments to conquering allied nations ushered in National Socialist rule.

It should be no surprise that over-taxed Finns have no interest in sending their tax dollars to bail out the banking industry of Portugal, a country that is 2,500 miles and two days travel away. Even governments should have learned long ago that it is never a good idea to enact these sorts of policies. In this case, however, every EU nation is bound by a political contract to bail out any other; the bailouts are embedded in the very structure of how the political, financial, and monetary sector is currently structured.

The entire EU system is afflicted with the paper money disease. It creates a boom that balloons the banking sector, allows politicians to spend wildly, and encourages private enterprise to expand operations in an unsustainable way. Then the bust comes and everything falls apart. Government revenue crashes, banks are threatened with insolvency, and mass bankruptcies are apparent everywhere.

Read Full Article