2013-10-22

Right-wing in Europe Reaching Critical Mass; Euro Bulls Should Read Polls, Not Charts

Notice the tone of the article, that somehow the right-wing is going to screw up the EU. This is because the EU has become a left-wing institution. However, there is a strong idea of a united Europe among the European people, and it wouldn't surprise to see the EU become right-wing. It could enforce a continent-wide restriction on immigration, for example.

Secessionists movements in Catalonia, Scotland and elsewhere are pro-EU in that they make more sense within the EU, the same way it would make sense for part of a U.S. state to become a new state within the U.S. If the EU falls apart due to nationalism, local secessionist movements will die out.

Watch out for the rise of a European Tea Party
In the coming year, however, the big danger to the European single currency is that the political consensus that underpins the euro could come unstuck. A weak economy, weariness with austerity, anger about immigration and resentment of a remote-seeming EU are fueling the ascent of anti-establishment and nationalist political parties across the continent.

These rising political forces are gaining ground in big EU countries such as France, the Netherlands, Britain and Italy – and also in smaller nations such as Greece, Hungary, Finland and Austria. Given that the EU requires unanimity for many big decisions, even a small state that goes rogue could cause real trouble.
I have seen the euro bulls becoming more bullish now that the debt crisis has been quiet for a couple of years and the euro is back in the mid 30s. This was always a political issue though, and next year is when the idea of an EU breakup for political reasons may finally become a mainstream topic. The above article is just the beginning; if you thought the Tea Party was hated, wait until you get a load of the hate that will be directed at UKIP, FN, and other anti-EU parties. They can do far more damage to the status quo in Europe, far beyond what the Tea Party would do even in its wildest dreams. Should the euro begin selling off, bond yields will rise and the crisis will be back. Right-wing parties are pro-cyclical in this regard: they are elected as anger at the EU rises. Their victories may lead to a weaker euro and more debt crises, which will increase anger at the EU and elect more right-wing politicians. If and when the EU falls apart, the egg will be all over the faces of the left. It will not be a great a loss as the fall of communism, but the left will be seriously damaged. Extremely bitter fights are coming in the next year.

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