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Europe Is Only Starting To Deal With Its Problems

Europe has only begun to deal with its real issues and it has a long way to go and a lot more social and political unrest to come.

By Joel Ross | Updated on October 30, 2011

It is good that Europe has been able to use baling wire and bubble gum to get past the immediate crisis, but they are far from fixing the real problems underlying the crisis. All of this should bode well for US real estate. The real issue in Europe is the underlying politics of the entitlement state where nobody really needs to work hard because you can’t really get fired, and if you are unemployed there is money from the state to keep you living well. Between unemployment and health care, and other socialist programs, you are not left in tough straits. Add to this the crushing red tape and bureaucracy, and the corruption still prevalent in some countries, and there is no incentive to start new businesses. This is especially true in Greece and Italy. Lastly, there are several of the problem countries where few pay taxes and none pay accurate taxes. Everyone has a good pension and nobody has a sense of fear of going hungry. Add to this the spectacle of Berlusconi who has for felony charges against him and who has parties with seventeen year old hookers. The fate of the Euro and in turn the world economy hangs on a guy like that.

To make all of that entitlement basket happen the PIIGS took on enormous amounts of debt and just kept mollifying the voters with more and more of the same socialist programs. It worked so long as the bubble economy kept the game going. The cultures of several of these countries was never one of hard work and honest behavior. That is the real difference in Europe, and why the Euro never made any sense. The Germans, the Dutch and the Scandinavians have a totally different culture and work ethic. Even the French have a better attitude. The result is a major clash of cultures which led to the present crisis. The Euro Zone could never really work over the long term because they were trying to combine apples and oranges and make gold.

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