Wow! That’s all I can say. This micro-farm/bee/chicken/agriculture nonsense has had me so engrossed that I have completely neglected to focus my oh-my-god-it’s-the-end-of-the-world-and-the-sky-is-falling cheery and optimistic outlook on anything else. In my obsession with the bees I have failed, for a while anyway, to wax – if you’ll pardon the pun – economic for your entertainment and enlightenment. It’s been so long that I’ve had to comb through the archives to find out what all the buzz is about. Well, I’ve discovered an absolute swarmof stories coming out of Europe, of all places, and one of them is an absolute honey.

Oh-my-god-it’s-the-end-of-the-world-and-the-sky-is-falling.

Those of you who are less distracted than I are probably already aware that there’s something going on in Greece. Similar stories are coming out of a few other places like Italy, Spain, Portugal and Ireland, too. The crux of the biscuit, so to speak, is that these countries have borrowed themselves silly and will not be able to pay back the loans. It’s sort of like when you get your monthly VISA bill and there’s the little section that says something like: “If you make the minimum payment of $61.00, you’re balance will be paid off in 22 years. But if you paid just $100 more a month it will only take 3 years to pay off saving you $47,286.73 in interest.” The hidden assumption is that during that 3 to 22 year period you won’t spend any more money. If you do the minimum payment will go up and the time will extend out until it reaches infinity.

Which is what has happened in Europe. The aforementioned countries have maxed out their credit lines. They kept spending – as people do – with the assumption that things will always be getting better and so kept borrowing more. Well, things didn’t go as planned and now these countries can’t even make the minimum payments on their loans. Using Greece as the example, the current situation is like this: their gross domestic product – the sum total of all economic activity in the country in a year – is about $312 billion and the government owes about $500 billion. The entire economy is smaller than what the government debt is.

This type of situation is typically called: Bad. 

The prevailing outlook says: Not to worry, some sugar-daddy country, like Germany or France – the two strongest economies in Europe – will step up to bail them out. No problem.

Except… They are putting some conditions on the deal. Things like “austerity measures”, “reigning in spending”, and “increased taxes”.

What happened when the Greek government tried to implement some of these conditions was that the Greek people said, in essence, “fuck off and die” and immediately started rioting and tried to burn the place to the ground. Europe now finds itself in what is commonly referred to as a Catch-22. IF they fail to bail out Greece, the Euro loses some serious cred as a global currency and eventually collapses. BUT if they agree to bail out Greece, then the four other single-points-of-failure in the Euro-zone will get back in line demanding the same treatment as Greece; for which there is not enough money and the Euro collapses anyway.

But let’s stay with Greece for now.

News stories from the other problem economies have trailed off because the news media – which can smell blood in the water better than a shark – realizes that there’s a bit of irony in Greece’s situation. I mean, Greece is largely considered to be the birthplace of western civilization. It’s where democracy was invented, rational thought, western philosophy. Isn’t it fitting that Greece is where the collapse starts?

Now, you may pooh-pooh my dire scenario but consider that the effort to rescue the Greek economy is something that will either fail or, er…, fail. Because, over the next couple of years, there are only two possible outcomes.

On one hand the government, in order to keep the people from rising up in civil war and burning the place to the ground, says “no” to the austerity measures and doesn’t get the money to rescue the economy. Greece gets kicked out of the Euro-zone in an attempt to save the Euro and they have to go back to using the drachma, which is basically Monopoly money.  There isn’t any money to pay the people – nobody wants drachmas – and the economy collapses, from this the World realizes that Europe isn’t serious about the E.U. and the Euro fails.

Or… The Greek government caves in to the demands of the bailouts and cuts social programs to the bone. Given that unemployment in Greece is currently hovering around twenty percent and that most of the workforce is employed by the government any such attempt to pare down paychecks and cut the government payroll will put the populace in a very foul mood indeed and they will rush out and burn the place to the ground in protest.

The Greeks aren’t the only people in the world who would react like this. Consider what would happen in the U.S. if Congress decided, not that they could ever make any decision but imagine for a second, that we really did need to live within our means and increase taxes and/or cut social programs like Medicare, Medicaid, and Social Security. Even the Republicans who say that such cuts are necessary don’t have the cojones to actually try it.

But Greece is much further along that path than we are.

So, big deal, Greece’s economy collapses. It’s only $312 billion a year. The U.S. government alone spends more than ten times that much.

Whoops.

Okay, the big deal is that Greece’s failure means that the economic model that had briefly united the European Union is faulty and unstable. Greece will fall out of the Union, not by choice – more like if we had kicked Louisiana out of the U.S. so we wouldn’t have to pick up the tab for Hurricane Katrina. The World’s attention would fall on Italy, et al, who will follow all Greece’s path out the door. This exodus will lead to the downfall of the Euro as a viable international currency, the collapse of the E.U. and, eventually, another war.

Now you really have gone over the top.

I wish.

First, I have a little experiment for you to do. Go into your bedroom and get the cup on your dresser you keep your spare change in, or get out your coin purse, and dump the contents on a table. Now, pick out all the Florins, Ducats and Reals. What? You don’t have any? That’s odd, Ducats were in circulation for eight-hundred years. Okay, then just the coins from the Roman Empire, they were in use a lot longer. None of those either? Hmmm… Let’s try something newer. Got any Deutschmarks or Francs? No, huh? So, basically all you have are coins from a monetary system, the U.S. Dollar, which has only been in existence since 1971?

“Ha!” You say.

This is important. Sure, they might have been called “dollars” before that but they were backed by gold and, before 1965, even the coins in your pocket would have been made from silver. Since then they’ve been backed by squat. Currency is not permanent, even in the scale of a human lifetime, so there’s really no natural reason for us to assume that the Euro, which has only been in business for about thirteen years, is going to last.

Next, get out your atlas. Look at Europe. None of those countries – none – is older than the U.S. And many, like Germany for example, are barely out of their teens. The countries’ names are the same, the languages spoken are the same, but the governments are utterly different – sometimes by multiple generations – than they were at the time the U.S. won its independence from the crown. Which speaks quite eloquently to the permanence of political organization, at least in Europe.

As you probably remember, modern currencies, are not backed by anything of value other than the good faith and credit of the political organization which creates the currency. If that political organization, i.e. country, is no longer around to back it up, then that currency is worthless.

And in Europe, countries – as political entities – come and go faster than the wars that shake them up and make them anew.

In 1914 the flashpoint in Europe was the Balkan Peninsula where some wacko terrorist assassinated the heir to the throne of the Austro-Hungarian Empire: Archduke Franz Ferdinand; a killing which was used as the excuse to start World War I; a war that ultimately totaled over eight million combat deaths and led to the political conditions which allowed the rise of the Third Reich which precipitated another thirty million or so deaths in Europe during World War II. Now imagine what it would be like to have five such flashpoints: Greece, Italy, Spain, Portugal, and Ireland; an abundance of nationalist/separatist/terrorist organizations, AND – the one thing that did not exist at the beginning of the First World War – economic chaos.

But, you might say, the two World Wars taught us that major conflicts, any conflict really, is too costly and there is not really any chance of a war breaking out in Europe again. Fair enough, but what makes you think it ever stopped? It may have gotten smaller but armed conflict is a European tradition. Go and Google “wars in Europe” and you will be presented with 123 different named conflicts that have taken place on the continent, just since 1800. 212 years.

It is not my intention here to be a downer and get you all in a funk for the weekend but rather to point out that it really is a matter of perspective. Through the lens of history, particularly economic history, currencies come and go, countries come and go, societies do the same, and even civilizations have beginnings. And ends. We live too close to history to see it happening unless we’re paying very close attention. In Europe, the borders now are not what they were twenty years ago, which were different than they were seventy years ago, which were different than they were one-hundred years ago. Why would anyone think that they’re going to be the same twenty, fifty or one-hundred years from now?

It may seem that the government of Greece is duplicitous in failing to catch their problems in time, but governments are only concerned with their own survival and will put off problems indefinitely; until they end up causing the very thing they hoped to avoid. The Greeks are not immune to this, nor is the rest of Europe, nor are we.

POSTSCRIPT: After I wrote this I heard an interview on NPR titled: Students, Police Clash As Spain Reaches Boiling Point. It discusses some of the points in my blog but also goes into the verticality of the debt crisis; the fact that municipalities are broke and their provinces are broke and the country is broke. The interview focuses on the just-coming-onto-the-radar violence in Spain. The interviewee also mentions Italy; which she describes as “too big to save”. Listen to it.