Quote from makloda:
Let's just say if the PIGS had their own currency (EUR SOUTH) and Germany, Benelux, France & Finland had another (EUR NORTH) then the PIGS one would likely trade at a fraction of the EUR NORTH. That is probably true for any large economic region including the United States, but my point is that the difference in prosperity and productivity inside of Europe from North to South is both shocking and disgraceful.
In the 1980s billions of EU funding was pumped into PIGS infrastructure projects in order to help modernize and diversify their economies. What came out of it? Economies solely depending on just two industries: tourism and construction - which unfortunately also bear a significant correlation considering how much of the Mediterranean property market was marketed to tourists/expats.
IMO, Club Med's fish rots down from the head: corrupt and completely incapable governments and municipalities.
1) It is too late for the periphery countries to diversify their economies. The countries that became manufacturing powerhouses after WWII were Germany and Japan - and that was by design post WWII by the Anglo American victors. Coincidentally, they were also stripped of military power.
The next phase of manufacturing powers, beginning in the 1970s, was Asia. GATT, later turned to WTO, accelerated their manufacturing ascension in the early/mid 1990s. Why? Because their employees are socially pliable, get little gov't benefits, and are dirt cheap.
To expect Greece or Portugal or Spain to diversify their economies is nonsense. Their incomes, already low, would have to go lower than their Asian counterparts. Their social programs too, very similar to Germany's, France's and Japan's, would have to be stripped to mirror the meager gov't benefits alloted to their Asian counterparts.
The US has always relied on its TBTF Banks to lend to the then third world. This lending process was a narcotic style economic addiction that no country can fight off. When these third world countries inevitably defaulted, the losses suffered by the US TBTF banks were socialized amongst the US taxpayers, and an austerity program, created by the IMF (US largest shareholder) forced the nationalization of resources and industries of the defaulting (little/corrupt) country. American companies then scoop up these investments for pennies on the dollar. And thus, a new US based oligarchy is formed in these countries.
So to wag your finger in admonishment at these small countries is disingenious IMHO. They are being treated much like Latin America and Eastern Europe Countries have been.
As for your charge of corruption in these countries - no one can deny that. But I believe that corruption, in various forms, exists everywhere. Rich countries too are very corrupt - just look at what has transpired in the US w/ Geithner/Paulson re AIG, TARP, etc... The only difference is that the size of our wealth stops the corruption from crippling us. But as that wealth, particularly amongst the middle class dimishes, then our corruption will not only look the same as it does in smaller countries - but for many Americans, it will FEEL the same. Their lives will be no different than those that inhabit the barrios of Latin America. Just look at the rising tent cities, 1 in 4 children on food stamps, etc...
Back to the periphery countries of the EU: These countries have tasted freedom and wealth and independence. I don't see them being corralled like subservient cattle. To wit, Iceland's recent referendum and rising civil unrest in Greece, which I fear, will only spread.
The future will be very interesting to say the least. In a matter of a decade or two, the world transformed. Up is down, right is left, front is back. It's a developing chaos on a so far, slow timeline. I think the likelihood of this chaos accelerating is significant. There are just too many imbalances that can't be corrected without massive disruptions to the economies of the world.
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