Europe gloated during the meltdown, claiming it would be left untouched. The claims return to haunt a failing Europe
I945: Europe is completely devastated and in ruins after the Second World War. It is also facing the haunting spectre of Communism emanating from the Soviet Union. And yet, Western Europe rises from the ashes and emerges as a powerhouse of economic growth and all round prosperity. The resurgence is thanks largely to the Marshall Plan implemented by the United States.
1957: A handful of European nations come together and form the European Economic Community that seeks a ‘European’ perspective on global as well as local issues. This is the first tentative attempt by Europe to emerge out of the trans-Atlantic embrace with America. Many more nations join by 1967 and Europe starts dreaming of a unified market that can emerge more powerful than America.
1993: The European Union emerges as an actual rival of the United States with 500 million citizens and 30% of the world output. By now, Europe is frequently critical of America and its policies – political, strategic as well as economic. The criticism climaxes after the foolhardy George Bush decision to invade Iraq in 2003 and many start openly talking of EU as a rival to the US and euro as the rival to the dollar.
2008: In the early days after Lehman Brothers collapsed, there is much glee amongst many in Europe. Analysts and hacks point out how Europe has fostered a more ‘responsible’ model of capitalism while America has gone beyond the pale. In a parody that seems inconceivable now, European media praises banks for responsible lending and handling of assets.
That perverted euphoria lasts just a few days. Within a matter of days, it is revealed that toxic assets, bankruptcy, bad debts, collapse and contagion had as much to do with Europe as America. In fact, the ‘star’ economy of the continent Iceland, that had delivered blistering growth rates for a decade, became the first country to go completely bankrupt as a result of the meltdown. The government in Iceland has collapsed and protests have become the order of the day when people wake up from the numbing shock of seeing a ‘market’ disappear into oblivion.
In 1945, Europe was in ruins physically. By the end of 2009, it could be in ruins in financial terms. All the smart talk and looking down at Uncle Sam has vanished as the major economies of Europe start prostrating themselves. But this time, Uncle Sam itself is in such deep trouble that Europe cannot even dream of another Marshall Plan!
The recent events in France are a classic case of disconnect between reality and perceptions. The government still insists that the economy will actually grow despite the meltdown. But workers and citizens in France have a dramatically different viewpoint. In end January 2008, more than one million protestors took to the streets in Paris demanding higher wages and job protection. One shudders to think what will happen when the economy starts actually shrinking in 2009-10 and workers ‘actually’ start losing jobs by the thousands. Then there are the poignant and depressing tales from England about how investors have lost billions of pounds in savings because they gambled on Iceland. Many British citizens started parking their savings in Iceland based banks because they offered higher interest. All that has vanished and hundreds of thousands stare at poverty because their deposits were not guaranteed by any State.
Credit rating agencies are now waking up to the financial nightmare unfolding in Europe. They started by downgrading Spain, Greece, Portugal, Latvia and now Russia. Ireland is next in queue. And don’t be surprised if England follows suit because as an economy, it is even more leveraged than that of the United States. Overall, the European economy is slated to shrink by close to 3% in 2009 – something that has not happened since the Great Depression.
I945: Europe is completely devastated and in ruins after the Second World War. It is also facing the haunting spectre of Communism emanating from the Soviet Union. And yet, Western Europe rises from the ashes and emerges as a powerhouse of economic growth and all round prosperity. The resurgence is thanks largely to the Marshall Plan implemented by the United States.
1957: A handful of European nations come together and form the European Economic Community that seeks a ‘European’ perspective on global as well as local issues. This is the first tentative attempt by Europe to emerge out of the trans-Atlantic embrace with America. Many more nations join by 1967 and Europe starts dreaming of a unified market that can emerge more powerful than America.
1993: The European Union emerges as an actual rival of the United States with 500 million citizens and 30% of the world output. By now, Europe is frequently critical of America and its policies – political, strategic as well as economic. The criticism climaxes after the foolhardy George Bush decision to invade Iraq in 2003 and many start openly talking of EU as a rival to the US and euro as the rival to the dollar.
2008: In the early days after Lehman Brothers collapsed, there is much glee amongst many in Europe. Analysts and hacks point out how Europe has fostered a more ‘responsible’ model of capitalism while America has gone beyond the pale. In a parody that seems inconceivable now, European media praises banks for responsible lending and handling of assets.
That perverted euphoria lasts just a few days. Within a matter of days, it is revealed that toxic assets, bankruptcy, bad debts, collapse and contagion had as much to do with Europe as America. In fact, the ‘star’ economy of the continent Iceland, that had delivered blistering growth rates for a decade, became the first country to go completely bankrupt as a result of the meltdown. The government in Iceland has collapsed and protests have become the order of the day when people wake up from the numbing shock of seeing a ‘market’ disappear into oblivion.
In 1945, Europe was in ruins physically. By the end of 2009, it could be in ruins in financial terms. All the smart talk and looking down at Uncle Sam has vanished as the major economies of Europe start prostrating themselves. But this time, Uncle Sam itself is in such deep trouble that Europe cannot even dream of another Marshall Plan!
The recent events in France are a classic case of disconnect between reality and perceptions. The government still insists that the economy will actually grow despite the meltdown. But workers and citizens in France have a dramatically different viewpoint. In end January 2008, more than one million protestors took to the streets in Paris demanding higher wages and job protection. One shudders to think what will happen when the economy starts actually shrinking in 2009-10 and workers ‘actually’ start losing jobs by the thousands. Then there are the poignant and depressing tales from England about how investors have lost billions of pounds in savings because they gambled on Iceland. Many British citizens started parking their savings in Iceland based banks because they offered higher interest. All that has vanished and hundreds of thousands stare at poverty because their deposits were not guaranteed by any State.
Credit rating agencies are now waking up to the financial nightmare unfolding in Europe. They started by downgrading Spain, Greece, Portugal, Latvia and now Russia. Ireland is next in queue. And don’t be surprised if England follows suit because as an economy, it is even more leveraged than that of the United States. Overall, the European economy is slated to shrink by close to 3% in 2009 – something that has not happened since the Great Depression.
Source : IIPM Editorial, 2012.
An Initiative of IIPM, Malay Chaudhuri
and Arindam Chaudhuri (Renowned Management Guru and Economist).
and Arindam Chaudhuri (Renowned Management Guru and Economist).
For More IIPM Info, Visit below mentioned IIPM articles.
Zee Business Best B-School Survey 2012
Prof. Arindam Chaudhuri's Session at IMA Indore
IIPM IN FINANCIAL TIMES, UK. FEATURE OF THE WEEK
IIPM strong hold on Placement : 10000 Students Placed in last 5 year
IIPM's Management Consulting Arm-Planman Consulting
Professor Arindam Chaudhuri - A Man For The Society....
IIPM: Indian Institute of Planning and Management
IIPM makes business education truly global
Management Guru Arindam Chaudhuri
Rajita Chaudhuri-The New Age Woman
IIPM B-School Facebook Page
IIPM Global Exposure
IIPM Best B School India
IIPM B-School Detail
IIPM Links
IIPM : The B-School with a Human FaceProf. Arindam Chaudhuri's Session at IMA Indore
IIPM IN FINANCIAL TIMES, UK. FEATURE OF THE WEEK
IIPM strong hold on Placement : 10000 Students Placed in last 5 year
IIPM's Management Consulting Arm-Planman Consulting
Professor Arindam Chaudhuri - A Man For The Society....
IIPM: Indian Institute of Planning and Management
IIPM makes business education truly global
Management Guru Arindam Chaudhuri
Rajita Chaudhuri-The New Age Woman
IIPM B-School Facebook Page
IIPM Global Exposure
IIPM Best B School India
IIPM B-School Detail
IIPM Links
