The United States of Europe
The United States of Europe is now merely a few treaties away.
The summer is a boring time in the market, even when there are crises everywhere. World markets have already experienced a summer slump and in Europe and the US there has been a nice recovery.
The question remains, will there be another slump in a few weeks time?
For another slump to occur, Europe will have to go into another tail spin.
This is precisely what will happen if Germany breaks the general bail-out consensus that seems to have been reached by other nations.
Under said consensus, the system would be bailed out a little each time bond markets began to close out a country like Italy or Spain from financing.
We will soon know. In any event, disagreement is likely to be mere political posturing .
While the press screams for an all-encompassing quick-fix, Europe is dragging the process out, thereby hammering out the political union it needs to progress the federalist dream of a USE, or United States of Europe.
This is now just a few treaties away.
If the price for this dream becoming a reality for the first time since the days of Attila the Hun is a few bank failures and some rioting, it will be nothing compared with the cost others have spent in failed attempts.
The EU was founded to weld a political entity that would not spin off into terrible war every 50 years. While the cost of the EU crisis might seem dramatic, its not really, not compared to the real crisis those sat glued to radios in the late 1930s on the brink of WWII experienced.
The politicians of Europe will grind through the currency crisis to unify Europe and until all the necessary paperwork is signed for deep fiscal unification; only temporary bandages will be applied.
Of course, there will be Eurobonds when the EU turns into the United States of Europe. Of course Germany wont bail-out an independent Greece and let Athens live off the taxpayer of Frankfurt.
It is not that Germany believes the poor should not live off the rich. That is the basis of a social state and Germany is very much a state that redistributes wealth from the successful to the unsuccessful.
It is that Germany and Greece are not yet unified that stops this process.
This unification is going to take a lot of time. Only the economic terror of a public sector and its pensions being scythed down by the devaluation of a Euro exit will force the transition.
The next sub-crisis in Europe will be France.
Once Spain and Italy are stabilised, which will be in two or three more bail-out moves, it will be the turn of France.
It will be the same old story again. Banks will need bailing so they can buy the countrys bonds, so the nation can lend them some back, which, in turn, the European Central Bank (ECB) can swap for some Euro-money.
The market will swoon, lots of politicians will grandstand, convoluted central planning manoeuvres will take place, French interest rates will be stabilised at 6%. By this time, fiscal treaties will be due to be signed. Certain key sovereign prerogatives will have been ceded to the EU and the core of Europe will be on the verge of federation. Small, non-Euro denominated countries may well join in, while countries like the UK will stay out.
In the end, by the time this process is complete, the US will be experiencing its own debt crisis and the final leg of the Second Great Depression will be in play. This would appear to be many years hence. Who knows what state the world economy will be in then?
Perhaps the developing world will have slumped badly, too. If it hasnt then those countries will have gained parity with the West and the real rebalancing will be between East and West and not just within the economies of the first world.
Clem Chambers is the CEO of leading stocks and shares site ADVFN.com and author of investment titles and novels. (www. clemchambers.com). Visit www.ADVFN.com for free, real-time stock prices
Follow Clem on Twitter: @ClemChambers
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