The European Union just passed a gigantic bailout deal to save some of its less fiscally solid members from pandemic-related economic disaster. Will it work?
Most Americans’ direct experience with the European Union is probably limited to the colorful Euro bills--featuring pictures of Roman arches and statues and such--that we use to buy stuff when touring Athens, or Paris, or Berlin, saving us from having to change money into a new national currency every time we switch cities.
But the European Union is so much more than the Euro: it’s a supranational institution of 27 different countries, and within that huge group it has a major say in everything from agricultural subsidies to data privacy to national debt.
And if the EU were a country, it would have the world’s largest economy and third-largest population, even now that the United Kingdom has brexited.
This week on the Elucidators, we’re going to discuss a historic step taken by the EU’s member states to try to rescue some of its financially weaker members from pandemic-related economic catastrophe. Will it bring the EU closer towards a United States of Europe, or are we maybe watching the beginning of the end for the EU? We have thoughts.
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Episode Cover Photo by Tabrez Syed on Unsplash
Steve: [00:00:00] Most Americans direct experience with the European union is probably limited to the colorful Euro bills, featuring pictures of Roman arches and stuff and such that we used to be buy stuff when touring, Athens or Paris or Berlin saving us from having to change money and to a new national currency.
[00:00:17] Every time we switched cities, but the European union is so much more than the Euro. It's a supernational institution of 27 countries. And within that huge group, it has a major say in everything for me, agricultural subsidies to data privacy, to national debt. And if the EU or a country, it would have the world's largest economy and third largest population.
[00:00:37] Even now that the United Kingdom has Brexit this week on the elucidates, we're going to discuss this historic step taken by the EU member States to try to rescue some of its financially weaker members from pandemic related economic catastrophe. Bring the EU closer towards the United States of Europe.
[00:00:54] Or are we maybe watching the beginning of the end for the EU? We have thoughts. And as always, if you like what we do, please leave us a five star review and share us on social media. Thanks.
[00:01:26] Hello, and welcome to another episode. Oh, via elucidates as always. I'm your host, Steve Palley and with me as always my cohost and producer, Pete Newsome. How are you doing Pete?
[00:01:38] Pete Newsom: [00:01:38] I'm doing well, Steve, how are you doing man?
[00:01:40] Steve: [00:01:40] I'm cruising. It's swimming weather here in Los Angeles. So I am. Working on my backstroke.
[00:01:48] Pete Newsom: [00:01:48] Hm. How how's your, your
[00:01:49] Steve: [00:01:49] backstroke? It's not good. I'm crooked. And I run into the side of the pool.
[00:01:54] Pete Newsom: [00:01:54] Damn man.
[00:01:55] Steve: [00:01:55] Well,
[00:01:56] Pete Newsom: [00:01:56] there's always room for improvement. I'm glad you're working, working at it. That's good. Yeah,
[00:01:59] Steve: [00:01:59] yeah. Yeah. I think, I think my, my left side has ever developed or something, but you know, the special exercises for this strive for balance
[00:02:06] Pete Newsom: [00:02:06] in all things.
[00:02:07] Steve: [00:02:07] Exactly. Especially in the pool, because you don't want to scrape my side. Yeah. But you know, It's it's it's COVID times. So we're all developing new hobbies, um, such as podcasting and the backstroke
[00:02:19] Pete Newsom: [00:02:19] backstroke and in podcasting that's right in 2020 is about
[00:02:23] Steve: [00:02:23] maybe, maybe next week's episode will be poolside who knows weather permitting.
[00:02:28] Anyway, what are we doing this week? Where are we?
[00:02:31] Pete Newsom: [00:02:31] Well, Steve, this week, we are in the European union. Ooh.
[00:02:36] Steve: [00:02:36] Yeah, that's not country.
[00:02:39] Pete Newsom: [00:02:39] It's not a country. It is a union that consists of 27 different countries. This week. The EU agreed to a historic bailout deal for, for its countries, for the COVID crisis. It's a recovery deal and it's part of a larger.
[00:02:57] Overall budget for the EU that they agree on every six years or so. But there are some new things about this bailout deal that have never happened before in the EU
[00:03:06] Steve: [00:03:06] never been done. Huh? That's right.
[00:03:08] Pete Newsom: [00:03:08] Brand new stuff in the EU. So the bailout deal consists of two parts. Some of the money is in the form of grants, which don't need to be paid back.
[00:03:17] So it's basically free money.
[00:03:19] Steve: [00:03:19] Nice. I like free money. Monopoly money.
[00:03:22] Pete Newsom: [00:03:22] I'll tell you I don't dislike free money either.
[00:03:24] Steve: [00:03:24] No. The
[00:03:25] Pete Newsom: [00:03:25] other part of this bailout deal consists of loans
[00:03:28] Steve: [00:03:28] less good.
[00:03:29] Pete Newsom: [00:03:29] So the grants are in the amount of 390 billion euros, which is a roughly 450 billion us dollars. That's a lot of money to be given as grants, and it's never been done before, ever in the EU.
[00:03:47] Yeah, the loans in this recovery deal consists of 306 Steve billion euros. So 390 billion in grants, 360 billion in loans. Loans have been giving, given out in the EU economic crisis he's before namely the Eurozone crisis, which took place. 2010 to 2012.
[00:04:10] Steve: [00:04:10] I remember that that's when the Greeks went bankrupt and almost bombed out of the Eurozone.
[00:04:14] Right?
[00:04:15] Pete Newsom: [00:04:15] I think that's the one.
[00:04:16] Steve: [00:04:16] Yeah, that's the one. Yeah. All right. We'll get into that a little bit later. All right. So 750 billion with a B euros, which is approach Shane a trillion dollars, not quite a trillion dollars. We're talking about a better than 50, 50 split for free money. Yeah, not bad to you. I
[00:04:38] Pete Newsom: [00:04:38] don't think so.
[00:04:39] I mean, it's necessary. It's what needs to be done, right? It's
[00:04:41] Steve: [00:04:41] a crisis. Well, it's certainly what's happening here in the United States where the money printing press has had been running full steam since March and Europeans are over there looking at this and being like, Hey, we can do that too. Maybe. For the first time, as it turns out, we will get in to the ins and outs and whys and wherefores before all that, though, I thought perhaps I could do a brief introduction to the European union itself.
[00:05:09] So we've talked about the European union before Pete, you mentioned that it is a 27 member States strong. It did not start out that way. It started out actually very small. Indeed. And the early 1950s between actually just Germany and France, who, as we all know are historic enemies. On a very large scale.
[00:05:32] They've fought, fought many, many Wars over the hundreds and thousands of years that these countries have existed in, in different forms. In the 20th century, we had world war one and world war II, which killed millions of the respective citizens fighting against one another fast forward to the 1950s. And they are sick of fighting one another.
[00:05:52] And what is the best way? For France and Germany to avoid fighting. Well, some big brands on both sides got together and decided that if they agreed to share coal and steel production, it would be pretty difficult to go to war again, because you need coal and steel to make tanks. And guns and stuff like that, plans to bomb each other.
[00:06:17] Pete Newsom: [00:06:17] I share a colon steel production with all my best friends. So
[00:06:20] Steve: [00:06:20] yeah, exactly it, yeah. Hey, when's that shipment coming? I need more coal.
[00:06:25] Pete Newsom: [00:06:25] We talked about this, Steve
[00:06:27] Steve: [00:06:27] and he'd cold run my air conditioner, clean coal of course. And so pretty much immediately after they make this deal, they're joined by Netherlands.
[00:06:36] Italy, Luxembourg and Belgium. And this is the European economic community. That's starts very small and remained small until the seventies. When we have the first new members join Denmark, Ireland, and the UK joined in 1973. In the 1980s, we have some Southern European dictatorships, finally fall grease, joins Franco finally kicks the bucket over in Spain and Salazar is out in Portugal.
[00:07:05] So we get Greece, Spain, and Portugal, the Southern European members in the 1990s, we have the so-called single Europe treaty, the Maastricht treaty and the shingling agreement, which dissolves the internal borders. Between the members of the European union. That's the next step for the Euro? It's in the two thousands, since the creation of the Euro currency.
[00:07:28] Now not every member of the European union joins the Euro. 19 of them end up joining. There are some notable holdouts like Sweden and the UK that never joined, but most European union members do join the Euro. And a lot of the ones that haven't yet are just trying to get their economies in the right shape to be able to do join because they have to satisfy a checklist of sort of budgetary requirements in order to be able to join the Euro.
[00:07:55] In addition, in the two thousands. Many Eastern European member States joined the European union because this is now a full decade after the fall of communism in Eastern Europe, the fall of the Soviet union, and a lot of these countries like Hungary, Poland, and so on. Romania are now in fighting shape at democracies and ready to join.
[00:08:17] Pete Newsom: [00:08:17] Gotcha. So from the fifties, it was just France and Germany. And by the two thousands, it was 27 total.
[00:08:23] Steve: [00:08:23] Exactly. Yeah. It, it has moved actually pretty quickly. However, in the last decade and the point 10 2010s, we had some challenging times for the European union, but we had the previously mentioned a Eurozone crisis, which.
[00:08:38] Basically was contemporaneous with the great recession here in the United States had manifested a little bit differently over there in the European union. In that the nucleus created Eurozone almost fell apart due to recessions bad recessions. And those Southern European member States. And this is an important point because those same structural problems and this sort of divide between the Southern European States and the Northern European States have reared their ugly head.
[00:09:09] Once again, here in 2020. So a bookmark that for later, it's important if the EU were a state and it's important to emphasize that it isn't. It's a, it's a voluntary supra national. Union of countries. So countries maintain individual sovereignty, but they're a part of this transnational organization that has a lot of important powers and they drive a lot of benefits from this organization.
[00:09:38] It's not a state, it's something new, something that. Some Europeans and other well-wishers we'd like to see, turn into a state, would like to see become the United States of Europe at some point. Not there yet.
[00:09:53] Pete Newsom: [00:09:53] If it were a state, how big would it be?
[00:09:56] Steve: [00:09:56] It would be very big. Indeed. It would have the world's largest economy bigger than the United States.
[00:10:02] That's big. Yeah. Real big. And it's third largest population. Behind China and India, but actually bigger than the U S it'd be about 500 million people, something like that.
[00:10:14] Pete Newsom: [00:10:14] Oh, wow. Okay.
[00:10:15] Steve: [00:10:15] Yeah, it's important to note that the EU is not really a military power, particularly not now that the UK has left, but it does have massive influence in the form of international aid, economic regulations, the EU sets all kinds of products and service regulations that trans national or multinational corporations basically set for themselves.
[00:10:40] To gain access to that huge market
[00:10:42] Pete Newsom: [00:10:42] internet privacy comes to mind is one of
[00:10:44] Steve: [00:10:44] them. Yes, it does. The GDPR, for instance, it's the general data privacy regulation of the European union is a wonderful example. Call in the form of cultural power and also democracy and human rights promotion. So the European court of justice, for instance, and the international court of justice are both headquartered in the European union and they are, they have successfully prosecuted war criminals from the Balkans from Liberia, lots of other places as well.
[00:11:13] So even though the EU is not a state and does not retain its own armed forces. It actually throws a lot of weight around, right. And this is even after the loss of the UK, which was its largest military power and its second largest economy. And if we were to think once again, in American terms, because we're Americans, this would be like the United States losing Texas.
[00:11:36] It's a big deal.
[00:11:38] Pete Newsom: [00:11:38] Right. It's a big deal, but it's not necessarily a deal breaker. It's just big.
[00:11:42] Steve: [00:11:42] Yeah. It's non-fatal the UK has gone its own way and the European union remains all major decisions at the sort of EU level, the trans national level that affects all the member States require unanimous consent.
[00:11:59] From 27 countries,
[00:12:01] Pete Newsom: [00:12:01] that sounds very difficult to ever
[00:12:03] Steve: [00:12:03] achieve. Yeah, it is. It is in fact achieved regularly, but it requires a lot of horse trading, 27 nations, some of which are very radically different, some of which are no longer even democracies. And we'll get into that too. Yes, that's right. The European union contains non democracies.
[00:12:21] Interesting. That's not supposed to happen. Um, it's, it's not,
[00:12:25] Pete Newsom: [00:12:25] but it has, let's talk about some of the details of this
[00:12:28] Steve: [00:12:28] deal,
[00:12:29] Pete Newsom: [00:12:29] the Corona virus bailout deal.
[00:12:31] Steve: [00:12:31] Yeah, totally. So what's the motivation for this deal? The motivation is basically COVID-19 did a number on Europe, just like it's done a number on practically every other country on earth, United States, Brazil, China.
[00:12:46] Of course, there are a few exceptions, Taiwan and New Zealand come to mind, but. Pretty much everybody else, including the rich countries of Europe really got pasted in the kisser by coronavirus. However, there's been kind of a differential effect for a lot of different reasons, just due to bad luck. The European outbreak got going in Italy.
[00:13:11] So Italy got the worst hit. In addition, Italy, Spain and Spain have somewhat older populations. Than some of the other European countries. And they, along with Portugal and Greece do not necessarily have the most trusting. Populations, when it comes to you, trusting the government, telling you what to do all of this to say Southern Europe had a tougher time with COVID trees are poorer and more indebted to begin with.
[00:13:41] So they're not necessarily poor. Italy is actually a pretty rich country, but to carry compared to Germany or Denmark, for instance, it's poor. And the Southern European countries classically have carried big budget deficits in this case, all over a hundred percent of GDP. So they're running massive deficits worth more than the, of the total amount of all the goods and services produced in each country.
[00:14:09] In the case of Italy, they're actually headed towards 200% of GDP not going good. Yeah, of course, Italy in Spain suffered mass casualties from the virus starting in March. And on top of this, one thing about Southern Europe is it's nice, nice place to go in the summer. There. They're very dependent on tourism.
[00:14:28] Nice beaches.
[00:14:30] Pete Newsom: [00:14:30] I really wish I was on a Greek beach right now, to be honest.
[00:14:33] Steve: [00:14:33] Yeah, that'd be pretty good. Mike knows. Yeah. And Northern Europeans in particular, Europeans like to take really long vacations and the months of July and August. Basically the whole continent shuts down in August and they all go to Southern Europe.
[00:14:47] Pete Newsom: [00:14:47] Do not blame them.
[00:14:48] Steve: [00:14:48] No, not at all. If you're from Finland or someplace like that, where it's about to be dark 24 hours a day for the next seven months. Yeah. Can't possibly blame you. But with COVID running rampant, that is much less likely to happen at the usual rates. So all of this to say Southern European economy is not doing so hot and.
[00:15:11] Here's the thing, critical point of being part of the Eurozone. That means that you're on the Euro. It means that you do not have the Italian Lira. You do not have the Spanish peso. You don't have the Greek drama, all of these national currencies. If you had a national currency, then you have the ability to print your own money.
[00:15:35] Which is what you do to stimulate your economy. You actually DBAs your own currency and start printing and spending you dump money into the economy, which is something the United States has done in very, very large amounts. Got it.
[00:15:48] Pete Newsom: [00:15:48] So these countries require money input from the EU. If they hope to recover from this, they can't do it themselves.
[00:15:56] Steve: [00:15:56] I can't do it themselves. They have to use euros or. Exit the Eurozone, which they don't want to do because
[00:16:04] Pete Newsom: [00:16:04] they don't want to do it. And the other countries in the EU don't want them to do it as well. Right.
[00:16:09] Steve: [00:16:09] Correct. Yeah. And we'll, we'll explain why in a little bit, because we're going to talk about those Northern Europeans.
[00:16:15] Ah, yes, those guys. And this is a group of countries, classically consisting of Germany, Netherlands, the Scandinavian countries, Austria. And those types of places, wealthier places, there's stronger economies. They're mostly based on manufacturing. We've got Daimler Benz. We've got Mercedes, we've got Volvo, which I guess is now owned by Ford.
[00:16:41] But you know, we won't mention that. Nevertheless. Yeah. They're, they're wealthy and productive economies. They're, they're more advanced economies and they're historically a lot less willing to take on debt. The Germans in particular hate the idea of debt because they have a really bad historical experience with debt in the interwar period between world war one and world war II.
[00:17:08] When the Weimar Republic printed a bunch of money and ended up in a situation of hyperinflation, which of course led to the rise of the Nazi party. And we know how that story ended not so great. So the Germans are. I think just constitutionally adverse to the whole idea of, of taking on debt. Okay. These countries have mostly done better with the virus.
[00:17:34] The Germans have done very well. The Dutch and the Swedes, actually not so much, but the other Scandinavian countries and Austria also pretty good on the balance. I think overall generally better than most of the rest of Europe. And it's important to note that these Northern European economies derive huge benefits from the Euro, especially Germany, which exports 60% of its stuff to the rest of the European union, all those luxury cars, all that machinery, industrial equipping.
[00:18:05] Pete Newsom: [00:18:05] That sounds like a very, a very strong motivation to keep the EU solvent every country in it.
[00:18:10] Steve: [00:18:10] Yeah, because once again, everybody's on the Euro. And that means that the Germans have no currency appreciation problem. That is to say. If I'm Greece and I'm buying a bunch of German stuff, what would ordinarily happen if I'm using my own currency instead of the Euro is I need a bunch of German Deutschmarks or, you know, the other currency in order to pay for those goods and services that I'm buying from Germany.
[00:18:43] So I change my Greek drama over into Deutsche marks. And the supply and demand operates for currencies just as it operates for any other good or service. So demand for Deutschmarks rises. And that means that they become more valuable relative to the Greek truck. The Greek drama is devalued and a balance is restored whereby because the drama is now cheaper.
[00:19:13] Ma I'm actually more able to export from Greece to Germany than I otherwise would be because my goods are now relatively cheaper and Germany is, are relatively more expensive. If we're both on the Euro, then this sort of balancing mechanism, this natural balance does not function. So the Germans basically enjoy artificially cheap currency within the context of the European union.
[00:19:41] And this is a big deal in terms of their ability to just continuously export all their stuff and make money with their European partners.
[00:19:49] Pete Newsom: [00:19:49] It almost seems like they should be more open to bailing out their fellow EU members. Yes. How much benefit they derive from this?
[00:19:59] Steve: [00:19:59] Seriously? Just
[00:20:01] Pete Newsom: [00:20:01] one man's observation.
[00:20:02] Steve: [00:20:02] It's not just your observation. It's I think also with the Southern Europeans are saying we've been buying your expensive stuff. Forever. Right. And we've gotten a lot out of being part of the Euro, but if you want us to stay in, we're going to have to do a deal. Right? In addition, the Germans and the Northern Europeans have more money are in better shape.
[00:20:23] They can afford to pay way more to support domestic companies. So ordinarily this is not allowed within the European union because it's anti-competitive, if I. You know, take out a bunch of state contracts for Mercedes-Benz cars or something like that. It's anti-competitive, and it's, it's bad within the context of the EU, but an exemption has been made during COVID times because every individual con con country.
[00:20:54] Needs to stimulate its own economy, however it can. Right. So they've been out raising debt individually once again in the Euro, but the Germans are way more credit worthy than the Italians are. So they get way better rates. Basically,
[00:21:10] Pete Newsom: [00:21:10] I give the Italians a lot of credit for certain things. Yeah. Ravioli.
[00:21:14] Steve: [00:21:14] Shoes. Beautiful shoes, red wine. I mean, Capri pants, gelato. Gelato. Yes. Yes.
[00:21:21] Pete Newsom: [00:21:21] Credit worthy in the gelato department. That's all I'm going to say.
[00:21:24] Steve: [00:21:24] Oh, and Dante is Inferno. Anyway. So this split between the North and the South has always been a problem in the Arizona, especially during the Eurozone crisis, which you were talking about earlier.
[00:21:36] Pete Newsom: [00:21:36] I'm an expert on the topic, to be honest,
[00:21:38] Steve: [00:21:38] I know please expound or I will.
[00:21:42] Pete Newsom: [00:21:42] I mean, I could, but maybe you should this time.
[00:21:44] Steve: [00:21:44] Yeah. I get sick of hearing you talk about it. So just going to,
[00:21:48] Pete Newsom: [00:21:48] I'm a broken record on the Eurozone crisis. Yeah,
[00:21:51] Steve: [00:21:51] I know, man. Uh, seriously, so Greece was in terrible shape due to the great recession and the Germans, the IMF and the European union more broadly.
[00:22:04] Basically just put this, put the screws to them in order to authorize loans that they needed to avoid sitting in the European union. And we're talking about austerity requirements on the order of firing half your civil servants, cutting half of your pension plan, re slashing government spending, you know, health and childcare and all this other stuff, basically.
[00:22:30] Turning Greece from a developed country into a place of a much worse standard of living and pretty wild politics, including blood in the streets there for awhile. I believe they had multiple governments rise and fall over the course of this year, ozone crisis in an effort just to see whether or not these bailout packages would pass, but they did Italy in Spain, almost defaulted to.
[00:22:56] But eventually Germany and France together, it sort of at that time, number one, and number three powers in the European union Britain being the number two power at that time, Germany and France decided to do whatever it takes to save the Euro. So they came through with the loans and the Euro survived barely
[00:23:16] Pete Newsom: [00:23:16] continue on to this day.
[00:23:18] Steve: [00:23:18] Yes.
[00:23:19] Pete Newsom: [00:23:19] As salt solvent members of the EU.
[00:23:21] Steve: [00:23:21] Yeah, they do. And so does Greece, but Greece only exited the austerity requirements. In 2018. It's only been a few years since they got out from under this like really onerous program.
[00:23:34] Pete Newsom: [00:23:34] Right. So it was like six, six or eight years that they were under austerity.
[00:23:38] Steve: [00:23:38] Yeah.
[00:23:38] Just like hardcore, like poverty rations that made the European union pretty unpopular, even though they are still a member. The basic problem at the heart of the European union, there are a number of problems with war we're talking about right now, is that. The Southern European countries have a big incentive to exit the Euro, regain their own currencies and start printing money to rescue their economies from this terrible situation.
[00:24:06] Pete Newsom: [00:24:06] And it sounds like a recurring theme.
[00:24:08] Steve: [00:24:08] Exactly. It is a recurring theme because they run bigger deficits and they're not as credit worthy, but they still need to raise money somehow. And it gets harder and harder and harder for them. The more money they raise, the more difficult it is to raise more. And you get into like this sort of debtor's spiral, whereby you're paying down your credit cards with new credit cards, basically the analogy, it's not a situation you want to be in.
[00:24:35] Meanwhile, the Northern European countries want to keep them in the Eurozone so they can continue to sell them stuff and make more money than they otherwise would. Also, if anybody leaves the hero it'll tank, the currency's value. And possibly lead to the destruction of the Eurozone in general, which would be very bad for them.
[00:24:57] So the Southern Europeans, even though they're poor, actually have a lot of leverage,
[00:25:02] Pete Newsom: [00:25:02] right. It kind of sounds like no matter what kind of noises the Northern European countries make. They're going to do everything they can to keep the Southern European countries from leaving the EU. At the end of the day,
[00:25:14] Steve: [00:25:14] it's this weird situation where like, somebody is threatening to exit.
[00:25:19] But they don't actually want to leave and you kind of want them to stay at the same time.
[00:25:26] Pete Newsom: [00:25:26] Yeah. That sounds like
[00:25:28] Steve: [00:25:28] it is kind of like a toxic relationship. I think, I think that's, that's apt and here's the other thing. The European union didn't do a good job with their COVID response. Initially. In fact, it really sucked the central health planners of the European union did not have a plan, had no idea how much equipment was available.
[00:25:49] Either to the European union or across the individual member of countries, there's like no data on that. And furthermore, there was no movement on a system wide plan until people actually started to die in Italy in late February. And just like everybody else, including us in the United States, we had been watching Wu Han since January.
[00:26:13] So we had time and they like us didn't use it. And that's a common theme too.
[00:26:20] Pete Newsom: [00:26:20] Just didn't foresee how big of a crisis it would be.
[00:26:23] Steve: [00:26:23] Yeah, no, the thought was, Hey, like we can test and isolate individual cases, no big deal. People didn't know very much about the virus at this time. They didn't understand how contagious it was.
[00:26:35] So when the Italians. Asked urgently for equipment and aid in late February, early March, they heard a bunch of crickets, no masks, no swabs, France and Germany actually banned the export of medical supplies. Okay.
[00:26:52] Pete Newsom: [00:26:52] That doesn't seem like a very unified
[00:26:55] Steve: [00:26:55] thing to do. No, everybody got scared. And when people get scared, it's kind of like, Every man for himself.
[00:27:02] And, but that's not supposed to be the case. Sure. That's,
[00:27:05] Pete Newsom: [00:27:05] that's exactly counter to the idea of a union. Right.
[00:27:08] Steve: [00:27:08] And in addition, everybody closed their borders, the internal borders of the European union, which also isn't supposed to happen. Wow.
[00:27:14] Pete Newsom: [00:27:14] So under the first sign of stress or the first amount of stress, some of the key pillars of the EU just
[00:27:22] Steve: [00:27:22] collapsed.
[00:27:23] It didn't, it didn't happen. Yeah. Okay. So if I'm the Italians and the Spaniards. I'm not so happy with the European union right now. I'm not, I'm not loving my membership. As it turns out 44% of Italians now want to leave the European union. This is up from 9%, 20 years ago. Wow.
[00:27:42] Pete Newsom: [00:27:42] That's a, that's a huge jump.
[00:27:43] No doubt.
[00:27:44] Steve: [00:27:44] It's a big deal because Italy is the EU is number for three power behind Germany and France. It's a top 10 economy in the world. And it's a founding member of the European union, which the UK was not. So the threat here is extremely real. Yeah. We're at 44%. So, you know, that is a ticking bomb at the heart of European union.
[00:28:08] Something has to be done to keep these guys happy and in the EU. So Pete, I asked you. What's in the steel man.
[00:28:16] Pete Newsom: [00:28:16] Right? Okay. Okay. The deal, the COVID bailout deal. So as we said earlier, the deal consists of a combination of grants and loans. The grants don't need to be repaid. The loans do Germany and France, which are the number one and two powers respectively saw eye to eye on.
[00:28:34] A rescue package that they originally pitched several months ago. And what they proposed was 500 billion Euro in grants and 250 billion Euro in loans.
[00:28:47] Steve: [00:28:47] Okay. So two third, one third, basically.
[00:28:49] Pete Newsom: [00:28:49] Yeah. And started at 500 billion in grants, which is of course higher than, than the final amount ended up being.
[00:28:56] Steve: [00:28:56] But.
[00:28:57] Pete Newsom: [00:28:57] As a counter Spain suggested instead of that, how about one point 5 trillion Euro in grants and all the money being grants? He said, I like that, but how about you triple the amount of money coming that has no strings attached?
[00:29:15] Steve: [00:29:15] Yeah, that's a good starting point.
[00:29:17] Pete Newsom: [00:29:17] Yeah. Don't attach strings to any of it.
[00:29:19] Yeah. And the Netherlands chimed in with a pretty extreme counter offer
[00:29:25] Steve: [00:29:25] of.
[00:29:26] Pete Newsom: [00:29:26] 1 billion Euro in grants.
[00:29:29] Steve: [00:29:29] Ah,
[00:29:29] Pete Newsom: [00:29:29] so you know, one, 500th of what Germany and France originally pitched. And I don't even know what the math is on, what fraction of what Spain was suggesting that
[00:29:39] Steve: [00:29:39] it's a fraction of a percent, like a 10th of a percent or less.
[00:29:42] Yeah.
[00:29:43] Pete Newsom: [00:29:43] Yeah. And let's note here that the Netherlands are part of a group of four countries that are. Called quotes the frugal for within the EU.
[00:29:53] Steve: [00:29:53] Oh, those, those sound like a fun bunch of guys. Let's hang out with those guys. I want to hang out with the frugal four.
[00:29:57] Pete Newsom: [00:29:57] They're probably like as popular as the Beatles within Europe,
[00:30:02] Steve: [00:30:02] the,
[00:30:02] Pete Newsom: [00:30:02] the fab four I'm referring to of course.
[00:30:06] So the frugal four consists of the Netherlands, Austria, Denmark and Sweden. So Northern European countries, right?
[00:30:13] Steve: [00:30:13] Yeah.
[00:30:14] Pete Newsom: [00:30:14] And they're frugal. That's where they got the name.
[00:30:17] Steve: [00:30:17] Yeah.
[00:30:17] Pete Newsom: [00:30:17] So those were the numbers that these countries were proposing going into negotiations over this bailout package. And the negotiations were originally scheduled to correct me if I'm wrong, three days.
[00:30:32] Steve: [00:30:32] Yeah, I think two or three days. Yeah. Okay.
[00:30:34] Pete Newsom: [00:30:34] So they, they, they went to have a meeting that was supposed to last two or three days. The meetings were very tense. The word on the street is that Macron slammed his hand on the table.
[00:30:45] Steve: [00:30:45] Metaphorically. It's so dramatic. Yeah.
[00:30:47] Pete Newsom: [00:30:47] Yeah. Major fireworks and sparks flying there.
[00:30:51] Steve: [00:30:51] One of these Sacrebleu blur. Yeah.
[00:30:54] Pete Newsom: [00:30:54] Actually the meetings took five days, so they, they went an extra two days.
[00:30:58] Steve: [00:30:58] That is a lot of rich dinners. I think
[00:31:01] Pete Newsom: [00:31:01] four, four or five dinner meetings, which for these guys is as, you know, a massive amount of work. In fact, the length of this
[00:31:09] Steve: [00:31:09] summit, either equaled.
[00:31:11] Pete Newsom: [00:31:11] The longest summit ever in the EU
[00:31:15] Steve: [00:31:15] or,
[00:31:16] Pete Newsom: [00:31:16] or exceeded it by just a little bit that's
[00:31:18] Steve: [00:31:18] intubated.
[00:31:19] Apparently there was a meeting
[00:31:20] Pete Newsom: [00:31:20] in the year, 2000 that that lasted for five days.
[00:31:23] Steve: [00:31:23] I, yes, the number of hours, the well known meeting in nice France, which I guess went an hour longer than, than this particular meeting.
[00:31:32] Pete Newsom: [00:31:32] Nice meeting. Yes. Here's something that's brand new in terms of anything that's been done in the EU before the money for this will be raised as common EU debt, which means it'll be raised by selling E U bonds.
[00:31:47] Steve: [00:31:47] Yeah. It's a big deal.
[00:31:48] Pete Newsom: [00:31:48] It is right, because they never done it and it looks kind of like what's done in the United States America to raise money. It's sort of similar to like us treasury bonds.
[00:32:01] Steve: [00:32:01] Exactly.
[00:32:02] Pete Newsom: [00:32:02] And of course these bonds will have a certain interest rate and a certain rate of return. And the hope is that the people will buy them and fund this massive
[00:32:12] Steve: [00:32:12] bailout bill.
[00:32:13] Exactly. So the assumption has to be that these bonds are going to be somewhat riskier than the us treasury bill, which is generally regarded as the world's safest investment because people assume that the U S is going to be around. 10 2050, a hundred years from now. I think this is still a safe assumption, although perhaps not as ironclad as it used to be given what's happened
[00:32:38] Pete Newsom: [00:32:38] recently.
[00:32:39] It feels a little different than it did a decade ago. Yeah. Yeah.
[00:32:41] Steve: [00:32:41] The whole point of these sort of EU common debt bonds is that the people that buy them are betting on the European union being around for the next several decades. And a lot of people don't necessarily think it will be, but these funds are intended to ensure.
[00:33:04] That it will be. So if you're making this investment, you believe it and do you want it to happen? So interests are aligned basically. Right.
[00:33:12] Pete Newsom: [00:33:12] And they're likely to raise that money. It would
[00:33:15] Steve: [00:33:15] be, I think so it'd be surprising if it just
[00:33:17] Pete Newsom: [00:33:17] didn't happen.
[00:33:18] Steve: [00:33:18] Yeah, no, I, I think it's, it's a certain, so as part of this
[00:33:22] Pete Newsom: [00:33:22] overall deal, the frugal for.
[00:33:24] Again, Netherlands, Austria, Denmark and Sweden,
[00:33:28] Steve: [00:33:28] penny pinchers. Those
[00:33:30] Pete Newsom: [00:33:30] penny pinchers did not get to say how the money it's used, but they do. There is a provision in the deal for putting a hold on the distribution of the funds. If the frugal Ford don't like. What they're seeing.
[00:33:42] Steve: [00:33:42] Right? So if the Spaniards or the Italians are having just parties on yachts, that where they light bundles of, you know, a hundred year old notes on fire,
[00:33:52] Pete Newsom: [00:33:52] to be fair, there's some precedent for that.
[00:33:54] Steve: [00:33:54] Absolutely. The yacht party part. Yeah. I don't know about that. You know, if they're necessarily doing that, but they all, they do have very generous pension plans. For instance, there is some suggestion that these countries are perhaps a bit more corrupt. Uh, than some of the other countries in the European union.
[00:34:13] I'm not pointing any fingers here, but yeah, if I'm the Netherlands and I'm seeing these guys get up to funny business, I can basically raise a yellow flag and say, Hey, put a hold on that trench of funds until you guys can explain what it's going towards a little bit better. They can't say no, you don't get it, but they can slow it down.
[00:34:35] That's my understanding.
[00:34:37] Pete Newsom: [00:34:37] So in addition to that provision where they can have some say about slowing down the distribution of those funds, those countries, the frugal four also got. Some goodies in the form of a bigger rebates from the EU budget.
[00:34:50] Steve: [00:34:50] Yeah. So, so these Northern European countries pay a lot of money into the EU budget because they have more effective economies.
[00:34:58] Germany is the biggest economy. It pays the most, but they're going to actually get a little bit more money back than they're used to getting. In addition, I have read that the Netherlands is getting more tax revenue from its ports. It has big ports, especially in Rotterdam. It's the biggest European port and it gets salt.
[00:35:19] It collects a lot of revenue from taxes on goods coming into that port that ordinarily goes to the EU and they're going to keep more of it. So all this to say side payments. Right.
[00:35:31] Pete Newsom: [00:35:31] Right. And if you're frugal, you gotta love that.
[00:35:33] Steve: [00:35:33] Yeah, absolutely.
[00:35:34] Pete Newsom: [00:35:34] In addition to these other provisions, There was discussion of putting a quotes rule of law provision into this bailout package.
[00:35:42] Steve: [00:35:42] What does that mean
[00:35:43] Pete Newsom: [00:35:43] also? I mean, well, spoiler alert. It didn't wind up in there,
[00:35:47] Steve: [00:35:47] but yeah, how disappointing
[00:35:49] Pete Newsom: [00:35:49] it would have meant is
[00:35:51] Steve: [00:35:51] that.
[00:35:52] Pete Newsom: [00:35:52] Getting money from this bailout package, would've been contingent on preserving the quotes rule of law within any given country that was getting the money. So the reason that that would even be discussed is that some countries in Eastern Europe are having what you might call issues with democratic governance to put it diplomatically.
[00:36:14] Steve: [00:36:14] Yes, as we do when we're discussing diplomatic issues,
[00:36:17] Pete Newsom: [00:36:17] if there's a place to be diplomatic, it's on the Elucidat as podcasts.
[00:36:21] Steve: [00:36:21] How we roll?
[00:36:21] Pete Newsom: [00:36:21] Yeah. The countries in question now we're just going to
[00:36:25] Steve: [00:36:25] yeah. Name and shame.
[00:36:27] Pete Newsom: [00:36:27] Yeah. Hungry, hungry under Viktor Orban.
[00:36:31] Steve: [00:36:31] Viktor Orban, the dash party. Yeah.
[00:36:37] Pete Newsom: [00:36:37] Basically hungry is not a democracy anymore. No. Or bond seize control of the media and the judiciary. And he's ruling by decree, especially during, I mean, most recently during the COBIT crisis, he's, he's basically turned into a lot of mirror boudin, but in Hungary,
[00:36:52] Steve: [00:36:52] Hungary, which is in the EU and the EU is supposed to be a group of likeminded democracies.
[00:36:57] Pete Newsom: [00:36:57] Yeah. Hungary's that way now. And then. We've got Poland,
[00:37:01] Steve: [00:37:01] which, yeah.
[00:37:02] Pete Newsom: [00:37:02] Poland is still a democracy, but it's like moving towards not being one.
[00:37:07] Steve: [00:37:07] Yeah.
[00:37:08] Pete Newsom: [00:37:08] A party called the law and justice party. Just want to narrow reelection victory for the presidency. And it's a right wing populist party. They are. Anti-gay they're anti-immigrant they're anti-Semitic they're overall illiberal.
[00:37:22] Steve: [00:37:22] And illiberal, very illiberal trying to run the Hungarian or Russian playbook in Poland.
[00:37:28] Pete Newsom: [00:37:28] And, and yet they're a member of the EU. And as we recall, all 27 member, countries of the EU have to agree and sign off on any big deal,
[00:37:39] Steve: [00:37:39] including this bailout, including this one.
[00:37:42] Pete Newsom: [00:37:42] So as you can imagine, This rule of law provision, didn't get included in the bill because Hungary and Poland would have voted against it or just
[00:37:50] Steve: [00:37:50] did
[00:37:51] Pete Newsom: [00:37:51] vote against, it
[00:37:52] Steve: [00:37:52] seems like a structural flaw in how the European union works.
[00:37:57] But I understand why it has to work that way. It's because the association is voluntary. It's not like the European countries fought a civil war. Whereby one side one and subjugated all the rest of them. That almost happened during world war II, but not quite right. Ironically, the Germans ended up in control anyway, but not they, they actually lost the war, which is kind of crazy.
[00:38:22] Yeah. So unanimity and because of that, we were in Poland. We're like, yeah, no rule of law provisions. So instead we have some very vague language in there, not naming Hungary or Poland. And not talking about authoritarians doesn't. So
[00:38:39] Pete Newsom: [00:38:39] those are some flaws, but it is what it is.
[00:38:41] Steve: [00:38:41] Hungarian Polander. We're going to get a bunch of money from this deal, even though they've actually done really surprisingly well with COVID.
[00:38:50] Yeah. Neither country has suffered many deaths. So all of this raises a bunch of questions. The main question that we and others have been wondering is whether or not this deal in its current form, it has unprecedented characteristics, especially this sort of joint raising of a massive amount of debt, and then disbursement of funds with no strings attached.
[00:39:21] The question is, is this the E's Hamilton moment? Or is it actually the beginning of the end for the European union or is it neither now? I'm pretty sure like 90% of the people that listen to the podcast have watched Hamilton at least three and probably more like six times. How about you, Pete?
[00:39:42] Pete Newsom: [00:39:42] I have watched Hamilton one time.
[00:39:44] Steve: [00:39:44] Do you recall what Hamilton did.
[00:39:47] Pete Newsom: [00:39:47] He, he didn't throw away his shot. That's what I
[00:39:49] Steve: [00:39:49] definitely didn't throw away his shot. There, there were a million things that he hadn't done, but you had to wait and then some stuff happened. Yeah. Yeah. He federalized the state's debts after the revolutionary war. And you know, basically at that point, the United States was a loose Confederation of States, not capable of raising tax revenue, disorganized and heavily indebted.
[00:40:16] And so the U S was not looking very good. Hamilton was like, all right. The federal government is going to assume all the debts of the States, and we're going to have a bank of the United States. We're going to print our own money and we're going to get this done. We're going to turn into a nation instead of a collection of States through this federalization process.
[00:40:38] The thing is that the United States generally speaking, we're a lot more United. At that time, then the 27 members of the European union, in addition, a lot of the United States haven't hadn't even been created yet, right there weren't that many States in the United States, the 27 members of the European union had mostly been around for a very long time in one form or another.
[00:41:00] Pete Newsom: [00:41:00] And the majority of them seem to have a strong interest in remaining independent nations.
[00:41:05] Steve: [00:41:05] Yeah. Very importantly, the new debt is not mutualized. Meaning that the individual members of the EU are not jointly and separately liable for each other's payback. And like, this is less meaningful than signing.
[00:41:20] Lease with three roommates whereby. If, you know, one guy skips out, the three people remaining are liable to pay his rent because it's not like a, the debt markets can't find, uh, let's say bulk area. Everybody knows where bulk area is. Right?
[00:41:38] Pete Newsom: [00:41:38] Well, frankly I don't, but
[00:41:40] Steve: [00:41:40] most people do. I think you can locate it.
[00:41:43] It's I'll give you a hint. It's in Bulgaria.
[00:41:46] Pete Newsom: [00:41:46] Look, as long as the word Bulgaria is written over it on a map, there's a chance I'll find it,
[00:41:51] Steve: [00:41:51] right? Yeah. The point is like, you know, it's, it's not mutualized so each country is still liable for the amount that it's going to spend. Right. And it's still possible for countries to default under the terms of this deal.
[00:42:07] It was not possible for States to default. Under the terms of Hamilton steel and the key issue here is another key issue is that the Eurozone has a unified monetary policy under the Euro and also the European central bank, which is in Germany and Prince the Euro. But it does not have a unified fiscal policy in terms of how member States choose to spend the money.
[00:42:33] Pete Newsom: [00:42:33] What would a unified fiscal policy look like?
[00:42:35] Steve: [00:42:35] So the Southern Europeans can continue to spend how they want to spend. So it's, it's a lot trickier to maintain a level of balance whereby everybody stays within a range, a fiscal range. That they don't get into trouble and require bailouts is the basic idea here.
[00:42:56] Hmm. The creation of the Euro was supposed to gradually usher in more fiscal unification, but this absolutely hasn't happened. In addition, the EU doesn't really levy much in the way of taxes. Member States have contributions to the EU. But they're not like compulsory taxes. Right,
[00:43:15] Pete Newsom: [00:43:15] right. And that would definitely usher things more towards being like one big country as opposed to
[00:43:21] Steve: [00:43:21] yeah.
[00:43:21] Yeah. So we're kind of stuck halfway. Right? Another question is whether the deal is big enough, we're talking about 390 billion Euro in grants. Divided among 27 countries. So it's not nothing, but will it be enough?
[00:43:38] Pete Newsom: [00:43:38] I mean, it's, it's less than what the United United States has pumped into the U S economy, right?
[00:43:43] Steve: [00:43:43] Yeah. It amounts to about 5% of the total GDP of the EU and our stimulus because we're more unified and we have this unification of monetary and fiscal policy. We're able to push it well over 10%, we can print way more money, way faster. And even though America is in worse shape in a lot of regards, like our control of the virus itself, we're in better shape financially because we've responded with like super aggressive.
[00:44:15] Stimulus right on the federal level and also more locally,
[00:44:21] Pete Newsom: [00:44:21] therefore staved off
[00:44:23] Steve: [00:44:23] disaster,
[00:44:24] Pete Newsom: [00:44:24] absolute disaster,
[00:44:25] Steve: [00:44:25] or at least pushed it down the road. Yeah. Right. With the unemployment provision ending, I guess in a week or two.
[00:44:33] Pete Newsom: [00:44:33] Knock on wood. Something's just there, but we'll see.
[00:44:36] Steve: [00:44:36] I think odds are very good that Congress will extend that unemployment provision, extended unemployment or boosted unemployment benefits.
[00:44:44] Pete Newsom: [00:44:44] It might've been determined by the time this episode airs.
[00:44:46] Steve: [00:44:46] We'll see. Yeah, it may very well. Yeah. And the sort of Canary in the coal mine here is Italy. And the Italian debt crisis would be 10 times worse than that. Greek crisis was 10 years ago. Like the Greeks were in terrible shape, but they also have a relatively dinky economy.
[00:45:04] Italy is much bigger and more, and the Greek crisis came super close. To sinking. The Euro lenders are basically running away from the Euro at one point, and it became very much more difficult to borrow in the Euro because the assumption was that the Euro was going away in the near future. Yeah, that's the Greeks.
[00:45:22] Meanwhile, Italy is currently two point 4 trillion Euro debt and its economy is projected to shrink 9% this year, which is higher than the 7.5% shrinkage that the broader Eurozone. It's going to undergo.
[00:45:39] Pete Newsom: [00:45:39] Yeah. Those numbers don't look good at all.
[00:45:41] Steve: [00:45:41] No, they don't. Uh, not for Italy. So it may very well be the case that Italy needs more help
[00:45:48] Pete Newsom: [00:45:48] overall budget that the year European union settled on for the next six years was like 1.8,
[00:45:55] Steve: [00:45:55] 8000000000001.8.
[00:45:57] Yeah.
[00:45:57] Pete Newsom: [00:45:57] Italy is two point 4 trillion in debt. Yeah. More than the whole U EU budget.
[00:46:02] Steve: [00:46:02] Yeah. It's okay to carry a lot of debt, but they're headed towards 200% double GDP, which is really not. Okay. In most cases, tenuous. Yeah. It's like, how are you guys ever going to pay us back? And the answer is we don't know, and we probably won't.
[00:46:21] But it's not like they can default,
[00:46:23] Pete Newsom: [00:46:23] but have some gelato.
[00:46:24] Steve: [00:46:24] Yeah. We have delicious gelato and the finest Italian leather shoes that remains true. Anyway, the deal also doesn't address other problems, right? Like the presence of a talker sees and the European union,
[00:46:39] Pete Newsom: [00:46:39] although it couldn't have addressed that.
[00:46:41] Right. Because the autocracies our member countries that can veto any type of attempt to address that.
[00:46:47] Steve: [00:46:47] Exactly. There is a provision for a country to decide that it wants to leave the European union like Britain has done. Right. There's an article that they invoke invoked in the treaty that they signed.
[00:47:00] But I don't think that there's a provision to kick a country out of the European union. If the other 26 countries are like, alright, hungry. JTFO you're done. I'm like, I don't think there's a way to do that because again, the idea was you have to become a democracy to join and then once you're a democracy.
[00:47:21] Pete Newsom: [00:47:21] Yeah. Why, why would you
[00:47:22] Steve: [00:47:22] change? Yeah, it turns out that's incorrect. It's
[00:47:26] Pete Newsom: [00:47:26] seeming like a bit of an oversight to some countries at this point.
[00:47:31] Steve: [00:47:31] And on top of this. There are parties, mostly from the right wing throughout individual EU countries, including really important ones. Like the Netherlands, like Germany, like Italy, like France, every single one.
[00:47:49] That's like the big EU countries remaining have powerful right wing parties that make a lot of noise about leaving the European union. And part of what they're saying, especially in the Netherlands in Germany is we're giving money. To the Southern Europeans and they're just lighting it on fire. So, so
[00:48:09] Pete Newsom: [00:48:09] ignoring the fact that their country's self, what is it?
[00:48:14] 40% of their goods to these Southern European countries.
[00:48:18] Steve: [00:48:18] And therefore
[00:48:19] Pete Newsom: [00:48:19] the Southern European countries are making the North, the Northern European countries rich.
[00:48:23] Steve: [00:48:23] On top of that, it's much easier to go vacation Southern European countries because they're part of the Arizona. Yeah. It's these are populous parties and they make appeals to emotion.
[00:48:34] And the following appeal they're ripping us off. We've seen in this country has a lot of political power. They're taking advantage of us, the ripping us off. Obviously we don't go into all the good things we get out of the arrangement because that's more complicated. People's eyes glaze over. When you talk about, you know, foreign exchange and a balance of payments and trade and stuff like this,
[00:48:57] Pete Newsom: [00:48:57] creating a scapegoat and focusing people's attention on it is very effective,
[00:49:02] Steve: [00:49:02] super effective.
[00:49:03] Yeah. And like none of these parties are in control of these big, important countries yet. But several of them are kind of threatening it's several of them have entered governing coalitions w you know, which is somewhat troubling. Hmm. So final thoughts, you know, is this the Hamilton moment? Is that the end of the UW or is it kind of neither?
[00:49:28] I think it's actually a really promising step because I think one of the founders of the European union said that the union would be forged in crisis. And we've seen this pattern whereby the EU kind of stagnates for a while. It goes backwards. People start grumbling, you know, what is, what is it you done for me lately?
[00:49:50] Right? All of these Polish plumbers are moving to my nice English village and, you know, taking away my jobs, you know, what am I getting from the European union? I don't like it. I want my country back so on and so forth. And then there's a crisis and the European union response, because it has to. And it tightens up the European union.
[00:50:11] People remember why it's important, why they want it in this case, the Italians and the Spaniards, and the Greeks are about to get a lot of free money. This comes after there are your European partners, you know, Kind of dropped the ball for the pandemic response in the early days, but it's like better, late than never they are coming through.
[00:50:34] Right. Yeah.
[00:50:35] Pete Newsom: [00:50:35] They're offsetting some things that they did that weren't so great in the early days of the pandemic.
[00:50:40] Steve: [00:50:40] Yeah. And on top of this, like I am of the opinion personally, I want to see the European union succeed. I want to see it turn into more of a state and to assert itself. On the international stage, because I think that it might be our last best hope on planet earth.
[00:51:01] These are guys that take climate change. Seriously. They take democracy seriously, and they have at least the economic power and the cultural power and the understanding to make a difference as part of the one point 8 trillion Euro budget that just got passed. There's a huge provision. For spending on climate change.
[00:51:24] As part of that budget in, in amounts and numbers that just aren't happening in the United States or China, which are kind of the two other contenders for global leadership. Right,
[00:51:34] Pete Newsom: [00:51:34] right. Yeah. That's a, that's a great thing. And it far exceeds what the U S is doing and in that sense is admirable and something that it would be great for us to emulate.
[00:51:45] Steve: [00:51:45] I agree. Yeah. And the U S has always been in the driver's seat since world war II. Right. At the moment we seem to be. I don't know, driving on way too much Percocet and slumping out of the driver's seat. Somebody's got to take the wheel here
[00:52:00] Pete Newsom: [00:52:00] now. We've climbed into the trunk somehow.
[00:52:02] Steve: [00:52:02] Yeah, we've been there.
[00:52:03] We woke up in the truck, the Chinese and the Europeans are kind of jockeying over the steering wheel right now. I think we should want the Europeans to win. I don't really like what the Chinese seem to be up to with their new found power. And I don't think I'm alone in the Western world. And. In large parts of Asia too.
[00:52:24] So
[00:52:24] Pete Newsom: [00:52:24] yeah, I agree with you there. And I am also in agreement with you. I would like to see the EU continue to exist. And as such you think that this bailout package that they've negotiated is, is a very good thing.
[00:52:38] Steve: [00:52:38] Totally. They had to do it right. Otherwise the EDU was going to end here and now, so.
[00:52:43] Accomplish anything that 27 States could agree upon in this emergency situation is a great sign because it means we get more time. Like we get another chance and it means that once this has been done before it can be done again,
[00:52:57] Pete Newsom: [00:52:57] right. This is sort of a proof of concept.
[00:53:00] Steve: [00:53:00] Exactly. Even though the, the, the Germans and the Dutch and the Swedes, and so on hate this idea, they understand that it sets a precedent.
[00:53:10] Yeah, and the Italians are probably going to need more money. That's just the bottom line
[00:53:16] Pete Newsom: [00:53:16] precedent for it to be no strings attached for the arguments to be made. Well, it's keeping our entire union
[00:53:22] Steve: [00:53:22] afloat. Right. And they can still buy our stuff, which is really important. And Italy's an important country.
[00:53:29] Like we should want them in the, in the union. Like we don't want them to go with a way of Britain and start competing with us and make us weaker. I
[00:53:38] Pete Newsom: [00:53:38] guess I would just say whatever happens. It's a new chapter for the EU. Isn't it? And will never be the same as it was before this
[00:53:44] Steve: [00:53:44] it's a big deal and it appears to have not thrown away.
[00:53:48] It's shot at least this time.
[00:53:50] Pete Newsom: [00:53:50] Yeah. Well, cool. Talk to you next week, huh?
[00:53:53] Steve: [00:53:53] Yeah. Talk to you next week, buddy. Thanks a lot. Alright, Steve. Bye. Bye.