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A Conversation on Europe’s Political Economy with George Friedman and John Mauldin

June 14, 2012

My travels last week took me to Austin, and I was able to stop by Stratfor to visit my friend and fellow thinker George Friedman. We had a great discussion about Europe, and luckily he had the wherewithal to video it. It is short for a discussion between George and me, but we got our points in. I think you'll enjoy hearing George's point of view on political economy versus economy, and our back and forth. I don't always agree with him ... but disagreement produces the best conversations. 

Click here to watch the video.

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Your agreeing to disagree analyst,

John Mauldin, Editor
Outside the Box

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Discuss This


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Ronald Nimmo

June 17, 2012, 7:35 p.m.

Your comment about the misconstruction of Keynes was right on the mark.
What economists like Krugman do, among other things, is only use half of Keynes’s policy formula. Keynes said that deficits incurred during a recession (or depression) to stimulate business should be repaid during periods of economic growth and prosperity. Thus, over a complete cycle (which includes both up and down phases) the government actually achieves a balanced budget. Rarely do either advocates or opponents of Keynes ever state his theory completely. What we have actually had is deficits in both the down and up parts of the business cycle.

robert Gilroy

June 16, 2012, 8:26 p.m.

Bob Gilroy

In listening to these two gentlemen I agree that indeed this is priceless.  It seems to me that Europe either has no economists or is paralyzed by politics and hence unable to solve their problems.  How then, do we best educate our citizens of all stripes to understand the economic realities which are fast approaching and will do us great harm if not properly understood and managed ?  It seems people simply do not understand the issues and are going to react badly when faced with economic pain.

Giles Conway-Gordon

June 15, 2012, 5:20 p.m.

The key point, made by John towards the end of his conversation with George Friedman, is that any durable and valid solution to the euro crisis must enable the redressing and rebalancing of the fundamental economic (and now overwhelming financial) imbalances between Germany and the other eurozone members. Germany has become the economic cuckoo in the euro nest.
The last 10 years have shown conclusively that this rebalancing will not happen while they share the same currency.
The least disruptive and painful solution would be for Germany to quit the euro and resurrect the DM; the ECB would remain the central bank of the new ex-Germany eurozone. This would avoid the messy multiple piecemeal devaluations which are the major alternative and provide some formal structure for the future management of monetary relations between all the present eurozone members.
Giles Conway-Gordon
Cogo Wolf Asset Management llc
San Francisco

Allan Baumgartner 37105

June 15, 2012, 1:40 p.m.

A United Countries of Europe is necessary - for harmony among friends and all people in Europe, for efficiency, and to keep the peace.
It won’t look like the United States.
It will be a hellish road to travel.
Thank all and god too the leaders of so many countries have stated and are moving up that road.
I applaud every crisis and every fix is a small step forward.

In historical time - it is fast play real time action. (My father would remind me it took us Swiss, 750 years to win our game in 1848.)

Watching is much more exiting than football.
allan baumgartner

Carey Page

June 15, 2012, 1:17 p.m.

Great conversation between two experts with great respect for each other. 
George Friedman’s emphasis on the history of European nationalism is, I believe, critical to the understanding of the failure of the EU.  In the past, one could pretty well predict the general response of a German or a Frenchman or a Brit to most situations (economic, social, etc).  On many issues, they were quite different.  The differences have led to EU failure, pretty much as predicted by Milton Friedman, though not on the exact time table.
I would submit, however, that “things, they are a changin’”  Germans, French, etc were predictable because population expansion was by birth rate and the associated acculturation (family, social institutions, etc.)that flowed from it. Immigration was nominal, and the Europeans never embraced assimilation of immigrant populations.  With declining birth rate below replacement levels through most of Europe, and immigration from cultures strange to Western Europe, the population of Germany has become less German, less English in England, and less French in France.  Consequently, their national character is changing quite rapidly (witness “no-go” zones for law enforcement in many European cities.
The United States as a nation of immigrants, in contrast, focused on assimilation of immigrant groups with the consent of those groups.  Immigrants recognized the benefits of this de facto national policy and became American in public society within a generation or two….until recently.  Diabolically, our governmental institutions seem to be working hard to change this strategy through emphasis on multi-ethnic multiculturalism - public customs, public language, and even public law. It seems a part of the overall strategy of the left to make us more like Europe in every way.  In effect, it represents the Balkanization of America.
Related to the EU’s failure because of pervasive nationalism (though different now) is their lack of understanding and acceptance of the concept of Federalism in structuring the EU and the EZ.

Ronald Nimmo

June 14, 2012, 3:09 p.m.

Great conversation. Thank you for letting us listen in on it.