- European Conquest

The chart above comes from an AWESOME zerohedge amalgamate of the data that's hanging out there regarding the economy. And while I absolutely love the chart, I think the probabilities are wrong.

"Fiscal Union" sounds like a very innocuous thing - maybe even a good thing when you're told that it will mean greater growth. But what it would really mean in Europe is the abandonment of a substantial portion of the unique identity of every European. All the national identities and all the tribal identities will have to be subordinated to the idea of being a "European" and I don't think Europe is ready for that.

I myself am of Irish descent, and we Irish are a particularly clannish people. My relatives in northern Ireland still called the people on the next block 'newcomers' when their ancestors had lived in the neighborhood since the 16th century. What's worse - they were biologically related. Both tribes were celts whose ancestors may have been temporarily separated by the Irish sea, but who were considerably less biologically diverse as a group, than your average south Boston catholic congregation.

Now take those same people, raised and thoroughly inculcated into that deeply tribal mindset, and try to convince them that they are actually a single people with aFrenchman, or an Italian, or a Greek. What's more, you will then tax the Irish (at what we would consider highly punitive rates) to ensure that the Greek civil servants can get 14 months pay for every 12 months worked, and retire at 55.

Fat chance.

And don't you believe that anywhere else in Europe is any different. German Bavarians and Saxons and Westphalians still all regard each other with a measure of contempt, to say nothing of how they feel about the Normans, the Basques and the Magyars. And don't even get me started on Switzerland. In it's heart Europe isn't one place, its 1,000. And you can't change that by writing a law in Belgium.

So, take that 25% that the chart assigns to 'fiscal union' and spread it out across the lower end of the spectrum, and I think you have a much more likely outcome in Europe.

In fact, even ECB monetization seems unlikely to me since:

1. They can't afford it.
2. They aren't allowed to do it under the law.
3. The German public will roast and eat the ECB ministers in the ashes of the their Frankfurt HQ if they tried it (and don't think those German's don't know how to riot. As in most things, they put your Greek and Italian rioters to shame.)

So now we reduce the ECB monetization to a more realistic 10%, and we have an additional 50% probability assigned to the lower, less pleasant set of outcomes. That I think is a more realistic look at the future of the Euro.

Like it or not, you can't conquer a people without using force. That's one rule of civilization that can't be changed.