Socialist EU Cracked, Crumbling from Inside

Socialist EU Cracked, Crumbling from Inside

Socialist EU Cracked, Crumbling from Inside

Europe has relied on the US for protection and economic support, and now The Trump Administration has sanctioned the single currency bloc for refusing to level playing field on trade and unfair trade practices

Friday, US President Donald Trump imposed tariffs on European steel and aluminum, dismissing Europe’s pleas, and an anti-EU populist government took office in Italy.

Added to Britain’s expected departure (BREXIT) next year from the EU are a clear indication major implications for the prosperity of its people and the bloc’s global relations.

The leadership role belongs Germany’s Angela Merkel and France’s Emmanuel Macron when it comes to strengthening the single currency union, and to work to ease worries about trade by strengthening ties with Japan, China and some South American nations.

The trade relationship with the US is the largest in the world, and actually cannot be made up if the US so sees fit.

US trade helped Europe recover from destruction’s of World War II. A break in relations will have implications for cooperation in other areas, like security.

The EU now knows that President Trump means what he says and he can hobble the EU’s growth at will, the socialist experimenters play a dangerous game challenging him and his policy vision.

The EU officials are cautious about their reaction to the political situation in Italy, for fear of further provoking supporters of the new government led by the anti-establishment 5 Star Movement and the anti-immigration the League having seen Eurozone financial markets dive this week on Italy’s political activies.

Italy’s new populist government plan tax cuts andspending, including a basic income for the poor, that will clash with EU limits on deficits.

Recall that Italy is 1 of the original signers of the 1957 Treaty of Rome that created a common market and paved the way for today’s European Union, And it has the 2nd heaviest debt load in Europe after Greece, at 132% of annual economic output.

Notably, the market volatility last week underlined the single currency union’s ongoing vulnerability after a Ys 2010-2012 debt crisis.

The 2 Key anti-Euro parties rise to power in Italy is a blow to supporters of the EU, as it could embolden other anti-Euro parties, which have won elections in Hungary and Poland.

This is all happening, as the EU enters Key negotiations with Britain on the country’s exit from the single currency bloc.

To add some added spice Spain’s government lost a no-confidence vote Friday and conservative Prime Minister Mariano Rajoy was replaced by socialist Pedro Sanchez.

These developments have many EU leaders looking for a strategy ahead of it 28-29 June Summit.

The meeting was originally focused on agreeing on how to strengthen the EU and the EUR based on proposals from French President Macron, who has temporarily stemmed the tide of populist discontent led by Marine Le Pen.

At the coming Summit, officials hoped for an agreement on a few issues, such as upgrading the Eurozone’s bailout fund for troubled countries.  The European Commission has proposed a EUR 30-B fund to help troubled Eurozone countries with investment spending over a 7-year period. German, the Key player, may not buy into it now.

We must all understand the disputes with the US go far beyond trade.

Europeans disagree with President Trumps’ decision to abandon a deal with Iran to limit its nuclear program and to withdraw from a global climate change pact.

President Trump is adamant that European countries, particularly Germany, must fulfill their commitment to spend at least 2% of their GDP on defense.

To be sure the sky is not falling, yet!

Europe’s economy is growing at a healthy pace.

Italy’s populists might not carry through on all their spending plans to avoid a crisis in financial markets.

And how far the trade conflict with the US will escalate is not yet clear.

The Germans will insist to ensure that European governments stick together on trade and push back collectively on the Iran nuclear deal by engaging in the Middle East which looks very iffy from where I sit.

The day’s of the Europeans being a strong player may well be numbered because of not being able to manage their internals.

Chancellor Merkel has to show President Macron that Germany is with France in wanting to strengthen Europe.

If not, the void Berlin leaves will be filled by others who will move to weaken the socialist experiment that is the EU even further.

Have a terrific weekend.

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Paul Ebeling

Paul A. Ebeling, polymath, excels in diverse fields of knowledge. Pattern Recognition Analyst in Equities, Commodities and Foreign Exchange and author of “The Red Roadmaster’s Technical Report” on the US Major Market Indices™, a highly regarded, weekly financial market letter, he is also a philosopher, issuing insights on a wide range of subjects to a following of over 250,000 cohorts. An international audience of opinion makers, business leaders, and global organizations recognizes Ebeling as an expert.

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