The French government has resigned for the second time in four months, following opposition from a couple of cabinet members to German imposed austerity measures. These left-wing members of the French parliament want the priority to be growth not fiscal discipline.
It should be noted that growth is the number one priority of the US Federal Reserve. In contrast, the eurozone believes the priority should be living within your means, hence the austerity imposed on a number of European countries.
The result after three or four years of austerity is a deepening recession throughout the EU. The latest country to go into recession during the second quarter is Germany, the economic engine that supposedly pulls the rest of the eurozone along.
Could Europe’s recession become a depression?
Before the Great Depression of the 1930’s, any downturn in the economy was described as a “depression.” In the 30’s the word had such a negative connotation that, after World War II, it was decided to use the milder word “recession” to describe a milder downturn. If an economy has negative growth for two consecutive quarters, it’s in recession. If the downturn is 10% or more, it’s a depression.
The problem is that a recession can easily become a depression. Deflation is a serious threat in Europe – that’s where prices and wages keep on going down. There is little that can be done to correct deflation, which is considered the worst thing that can happen to any economy.
As economies go into reverse, the consequences are hard to predict. A look at history can help.
Rising unemployment and spreading poverty, despair, and hopelessness led to the rise of fascism in the Europe of the 1930’s. A number of countries, including Germany, turned to dictators who promised them everything. Those dictators, in turn, led their countries into war, which at least helped boost economic growth. Vast populations blamed the Jews for their financial problems, claiming the Jews controlled the world’s financial system; the result was the Holocaust in which six million Jews died.
Could it happen again?
Of course it could. European history shows that the Jews have been turned on repeatedly throughout history.
Could a depression bring about the collapse of democracy? All EU members are required to have a democratic system of government but most governments in the EU have lost a great deal of support during the economic crisis. If conditions worsen, there is no guarantee democracy will survive. When people are going hungry, they don’t care about constitutional niceties!
Could the EU fall apart?
Yes, it could. The Euro has been a great success for the wealthier nations but is hindering growth in other countries. In the past, countries like Greece, Portugal and Spain could devalue their currencies to boost trade; they can no longer do this when their currency is controlled externally.
In Revelation, chapter 17, we see that a union of ten nations is prophesied to come together at the end time. The EU is a union of 28 members, who, most of the time, are not very united. The UK is even considering pulling out of the Union, which is unprecedented.
A new and different union would emerge after a collapse of European economies. It would also have to emerge fairly quickly if it is to defend itself against the rising threat in the Middle East.
Keep watching events in Europe as well as the Middle East. The latter is the main focus of Bible prophecy but Europe is in second place. Europe and the Middle East have impacted each other greatly down through the centuries and will continue to do so.