For too long many US-based financial market commentators have been looking at the eurozone crisis through pictures like this (an old chart of the Italian-Germany 3-year government bond yield spread)...
...as opposed to pictures like this (of Brandenburg Gate in Berlin).
I'm an American, and have now spent a little under a month in continental Europe over the past few years, so this is just my outsider's take on their economy, but my biggest takeaway for Americans is that we have to stop looking at their crisis through the perspective of bond yields and our own cultural lens, which is easier said than done.
Throughout Europe, but especially in Berlin, there are signs everywhere of past national glory and national defeat. As a tourist, you're likely to stop by the Brandenburg Gate, a former city gate and later a symbol the Nazis used to represent the power of their movement. And then a short walk away you have the Topography of Terror and the Memorial to the Murdered Jews of Europe, signs of the consequences of extreme nationalism in the 20th century.
In Paris you have the Arc de Triomphe glorifying those who fought and died for France, and then on any tour of the city you'll get information about the many revolutions in France in the18th and 19th centuries, and the embarrassment of the Vichy Regime that collaborated with the Axis Powers during World War II.
With this history hanging over the two largest economies in Europe, it's no wonder there's been a several-decade push to integrate Europe politically and lessen national identity.
And again, as a tourist, you can't help but remark how walking around the streets of Berlin, Paris, or Milan isn't that different from walking around San Francisco or New York. As one writer told the New York Times
, “I don't get an exotic feel out of the Champs-Élysées. It feels more like nowhere, because we find the same things as everywhere.”
You find the same smartphones everywhere. The same Hugo Boss and Gucci stores. Starbucks and McDonald's. The same ads for the same American movies. The European consumption and media experience is becoming more and more homogenous.
The best meal I had in Europe on this trip was at a Thai restaurant in Berlin. Not that I sought out the best of the best, but my favorite German and French restaurants are still in San Francisco. The signs of increased immigration from North Africa, the Middle East, and the rest of Europe are everywhere.
So politically, forces are trying to integrate Europe at the behest of elder elites who have emotional memories of World War II. Culturally, forces are trying to integrate Europe, and the rest of the world for that matter, as we all increasingly consume the same products and services, and as immigration, legal or otherwise, makes our countries more ethnically heterogeneous.
Keep this in mind when you read about European bank capital ratios and sovereign bond spreads. There may be stumbles along the way, but the European project is here to stay.
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