EUROPE IN DECLINE

Here is a piece by Robert Samuelson in the Washington Post. He hits the nail on the head about Europe, which has bigger problems than the declining Euro and the rejection of the EU Constitution.

It's hard to be a great power if your population is shriveling. Europe's birthrates have dropped well below the replacement rate of 2.1 children for each woman of childbearing age. For Western Europe as a whole, the rate is 1.5. It's 1.4 in Germany and 1.3 in Italy. In a century -- if these rates continue -- there won't be many Germans in Germany or Italians in Italy. Even assuming some increase in birthrates and continued immigration, Western Europe's population grows dramatically grayer, projects the U.S. Census Bureau. Now about one-sixth of the population is 65 and older. By 2030 that would be one-fourth, and by 2050 almost one-third.

No one knows how well modern economies will perform with so many elderly people, heavily dependent on government benefits (read: higher taxes). But Europe's economy is already faltering. In the 1970s annual growth for the 12 countries now using the euro averaged almost 3 percent; from 2001 to 2004 the annual average was 1.2 percent. In 1974 those countries had unemployment of 2.4 percent; in 2004 the rate was 8.9 percent.

I've said it many times, and more and more of the punditocracy is coming to the same conclusion. Europe as we have known it is dying. The consequences of the death process which will unfold in the coming decades ought to be of more than passing interest to us as Americans. Samuelson understands this, so I recommend you read the whole article.