What is interesting is that during Japan’s lost decade [from 1991-2001] it outperformed the Eurozone in all categories: growth was faster, debt growth was slower, manufacturing productivity was higher, and labor costs grew more slowly.
Obviously there are several takeaways here, and we haven’t even broached the disastrous social impact of towering unemployment rates [specific country brain drain, birth rates, fall in scientific research, family strife, suicides, etc.]:
- If growth doesn’t resume soon, debt/gdp ratios across the Eurozone will mirror Japan’s; but in many ways because of such poor relative productivity and size of the Eurozone banking system the rise in debt will likely be that much more dangerous.
- As a hub for future industry in a globalized world where multi-nationals have so many choices, it looks bleak for countries inside the euro straight jacket. In short, foreign direct investment will go elsewhere.
- Instead of bringing cultures together, the single currency is helping bring old animosities to the surface, which are numerous thanks to two recent civil wars (WWI and WWII).
It seems unless something very big happens fairly soon, politicos across the Eurozone will be responsible for marginalizing the future of their people simply because they have invested so much political capital in this bold, but seemingly failed, experiment called the single currency despite passing by all the signs that read, “Turn back now!”
So, what is the endgame here?