THE EUROPEAN UNION
Ireland also fell victim to sovereign debt crisis, when its government guaranteed a number of the country's banks who had made less than prudent loans to real estate developers and homeowners in the early part of the century. Losses reached 100 billion Euros. Unemployment rose to fourteen percent in 2010. The national debt increased to ninety five percent of G.D.P., accompanied by a budget deficit of thirty two percent. Moody's downgrded the debt instruments issued by the banks in question to "junk" status. In borrowing from the European Central Bank to "bail out" the Irish banks' bondholders, the government was criticized as having effectively shifted the economic burden thus created onto the shoulders of the nation's taxpayers. Of late, Ireland has sacrificed and practiced a good deal of austerity, in seemingly sincere steps that are leading to slow revival and recovery.
Portugal was forced to request a loan of 78 billion Euros to stabilize its public finances, which resulted from decades of government overspending and financial mismanagement. In 2010, the nation's public debt constituted ninety three percent of its G.D.P.; and Moody's reduced its credit rating to "jumk" status. With the aforesaid loan, plus austerity and reform, Portugal is also on a slow road to hopeful economic recovery today.
Spain's public debt was only sixty percent of its Gross Domestic Product in 2010. Nevertheless, a "bailout," in the form of a loan of 40 to 100 billion Euros was being considered. In the midst of this, Spain enacted a wise constitutional amendment in 2011, which requires achievement of a balanced budget, both nationally and regionally, by 2020.
Italy's public debt had grown to 119 percent of Gross Domestic Product in 2010. Numerous austerity measures enacted in 2011, and replacement of its Prime Minister, have resulted in hope for a brighter economic tomorrow.
France, Germany, and Great Britain, a few of the more northerly among the members of the EU, appear to have fared better than their southerly neighbors. At the same time, Switzerland attained benefit, as funds shifted in great quantities from some of the aforementioned troubled nations, a result of the said financial crises, caused appreciation of the Swiss Franc with regard to the Euro.
It is hoped that lessons learned by reason of these events will have imparted greater knowledge, sensibility, and restraint to those in command of economic aspects in particular member nations.
Moreover, it seems clear that the only means to truly prevent the difficulties such as have thus occurred lies in the European Union becoming truly united, politically--which would include economic policy and financial regulation. A single Europe-wide government, which would formulate and administer a single Europe-wide financial program, would prevent the economic errors of some to result in woe for all--including the more fiscally sensible members of such a united body.
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It is important to note, however, that economic improvement was not the primary motivating factor behind the conception of the European Union. A democratic form of government and an atmosphere of basic human rights were and continue to be prerequisites for admission thereto.
Could what has been related here constitute an indication of a trend taking shape before our eyes--whereby groups of nations in different geographic regions will join together to form federations--to be followed later by these federations one day merging to form a single final super-federation that will encompass the entire world? Is this perhaps how World Unity will one day come to pass?
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