There has been some major nail-biting in the past several weeks over fears of a financial crisis emanating from Europe. This is not new; for more than a year we’ve had some understanding of Greece’s dismal fiscal outlook, as well as the possibility for a dangerous contagion to other vulnerable peripheral Eurozone countries. But in the past several weeks these fears have worsened amid concerns that a Greek sovereign default is imminent, and that European banks are more exposed and less well capitalized than previously thought. This situation is frightening to say the least, especially as government balance sheets around the world are so stretched that the type of massive fiscal response that we saw in 2008 is pretty much out of the question. Now there is legitimate chatter about the possibility of a crisis worse than the one we just experienced.
The calls for a Eurozone break-up are growing in intensity. The argument goes as follows. Any countries wishing to enter into a currency union must (by definition) sacrifice their own independent monetary policy, which is exactly what the Eurozone countries did in establishing the European Central Bank. The problem is that this takes away some key tools used by countries faced with recessions, which is for the central bank to lower interest rates and devalue the currency (the latter makes exports more attractive to foreigners and can spur growth). But now, there is just one single monetary policy and one currency for the entire Eurozone, which is made of countries in vastly different economic situations. With Greece (and other peripheral Eurozone members) in desperate need of growth in order to have any shot at meeting its fiscal obligations, a cheaper currency sounds like a pretty attractive tool, but it is unfortunately off the table.
The next logical step in this argument is to call for Greece to leave the Eurozone, if not a return all the way back to the way things were before 1999. But then people start thinking of the catastrophic costs of such a move, all the way down to changing all the parking meters, and most eventually conclude that saving the Eurozone would actually be less costly than dismantling it.
Here is where it gets pretty remarkable, if you ask me… Economists, investors, traders, and pretty much anyone else watching these events are desperately hoping for a breakthrough in European policy that would take the pressure off of Greece and the other heavily indebted European nations. This can take many forms, but most people agree that the big hammer in the toolbox is to completely move towards fiscal (in addition to just monetary) unity, setting up a European finance ministry with the ability to issue European bonds as a single, unified borrower. Right now there is very little political will for this level of unity on the part of European policymakers. And yet, ultimately these individuals know that to get markets to ease up and stop dumping European bonds, a massive step towards unity might be the only choice.
On its surface this step towards unity looks like an accident of history, not evidence of the Divine. Indeed, God is not the one sitting at a Bloomberg terminal, buying Greek CDS until Angela Merckel says the word “Eurobonds”. We have actual human beings doing that, most of whom are primarily concerned with the size of their 2011 bonus, not executing God’s divine plan. And yet, these self-interested individuals are unwittingly pushing us towards our ultimate collective destiny of a single unified human family. Whether or not you believe in God, you can marvel at the fact that there appears to be something inherent in existence, almost like a law of nature, that is leading us down that path.*
Of course, the Baha’i Writings teach that this is no accident, and that the natural state of the human being is, in the words of Baha’u’llah, “to be even as one soul, to walk with the same feet, eat with the same mouth and dwell in the same land”.
I’ll wrap up and simply leave you with this passage from ‘Abdu’l-Baha:
[A]ll the members of the human family, whether peoples or governments, cities or villages, have become increasingly interdependent. For none is self-sufficiency any longer possible, inasmuch as political ties unite all peoples and nations, and the bonds of trade and industry, of agriculture and education, are being strengthened every day. Hence the unity of all mankind can in this day be achieved. Verily this is none other but one of the wonders of this wondrous age, this glorious century. Of this past ages have been deprived, for this century–the century of light–hath been endowed with unique and unprecedented glory, power and illumination. Hence the miraculous unfolding of a fresh marvel every day. Eventually it will be seen how bright its candles will burn in the assemblage of man. (Selected Writings of ‘Abdu’l-Baha, pp. 31-32)
* For a great book on this topic (by someone who is not a Baha’i), read Robert Wright’s Nonzero.