Saturday, June 11, 2005

The women and the child first

Whither Europe and the Euro?
Quite simply, you can't fight demographics. Strikes against demographics have no effect. The European nations have promised hundreds of trillions of dollars in social benefits over the coming decades. They simply do not have the money. There are a very limited number of things they can do, none of them easy. They can cut the subsidies. They can raise taxes. They can promote aggressive immigration (but from where would be the issue). They can leave the currency union and inflate their way out of the debt problem, which of course would destroy their currency. As I have noted before, farm subsidies are dead in a few years. There will be vastly more retirees who want their checks than farmers. Politicians can count votes, if nothing else.