Is Euro-merica In Our Future? ... No and Here's Why ... Private Sector Led Economic Growth is the Answer ... It's The Only Answer, In Fact

Europe is a financial mess. Its social democratic welfare state has run out of both money and time.

And its citizens are so used to government knows best subsidies that they have forgotten how to compete for business. Hence, their finances are in shambles and their economic outlook is bleak.

Just how bleak is summarized in EU Slashes Growth Forecasts:

"Europe faces a deeper-than-expected recession in 2012 with a modest recovery only taking root next year, while unemployment will continue to climb, the European Commission said Wednesday. . . .

The EU also signaled that despite deep and painful reforms in some of Europe's most troubled countries, economic divergences could continue to widen within the single currency bloc and the EU as a whole. . . .

The Commission downgraded EU-wide growth expectations for 2012, saying the region's economy would shrink by 0.25% this year and grow 0.5% in 2013. The picture for the euro zone is bleaker. The EU predicted that the 17-country bloc will contract 0.4% in 2012 and grow by a mere 0.1% in 2013. It previously forecast a flat economy in the EU this year, with a 1.3% rise in 2013, and for the euro zone to shrink by 0.3% in 2012 and grow 1% in 2013.

Risks even to this fragile recovery persist, the Commission warned, saying that "the experience of the past two years shows that reversals of sentiment can happen very rapidly if the implementation of measures falters." It acknowledged that austerity would prove an obstacle to growth in the short-run. . . .

The Commission forecast Spain's economy would contract 1.4% in this year and next and said its jobless rate will peak at 26.6% in 2013. . . .

The Commission predicted Italy's economy will contract 2.3% this year and 0.5 % in 2013 and said it sees Italy running a "structural" budget deficit—adjusted for the business cycle and one-off measures—of 0.4% of GDP in 2013 and 0.9% of GDP in 2014. Italy has pledged to achieve a balanced budget next year and maintain it thereafter."

See also Europe Foresees Weak Recovery Next Year:

"Now, the commission predicts Europe will have to wait more than a year to generate “a stronger and more evenly distributed expansion.” It forecast growth for 2014 of 1.6 percent across the Union and of 1.4 percent in the euro area.

Olli Rehn, the economic and monetary affairs commissioner, sought to put a positive spin on the figures by saying they showed “a gradual improvement in Europe’s growth outlook from early next year.” He also highlighted that “market stress has been reduced” since European leaders began to overhaul the institutions running the euro and since the European Central Bank pledged to shore up vulnerable economies.

But Mr. Rehn acknowledged that Europe was going through a “difficult process of macroeconomic rebalancing, which will still last for some time.” And he highlighted a need to “bring unemployment down from the current unacceptably high levels.”

Unemployment will peak next year at slightly below 11 percent across the Union and at 12 percent in the euro area, according to the commission.

James Nixon, chief European economist in London for Société Générale, said the figures probably overestimated growth prospects. “It’s going to be a tough couple of years,” he said....

“It is quite a pessimistic conclusion on Spain, which suggests that they are going to miss deficit targets by a distance,” Mr. Nixon said. “I think the implication of that is that we are likely to see more austerity next year, and that means that the growth outlook will be worse than predicted.

“The countries of Southern Europe are engaging in multiyear adjustment programs,” he said. “It is unrealistic to expect Spain and Italy to exit these programs before 2015.”

The report also underlined the hazard the European Union faces from devastatingly high levels of unemployment, which could “bring social hardship and a destruction of human capital detrimental to longer-term growth.”

Specific country targets reported by the commission included the following:

Spain - G.D.P. shrinkage of 1.4 percent this year and next before returning to growth of 0.8 percent in 2014.

Greece - A contraction of 6 percent this year and of 4.2 percent in 2013, before returning to growth of 0.6 percent in 2014.

Germany - Growth in the bloc’s biggest economy of 0.8 percent this year and next, and of 2 percent in 2014.

France - Growth of 0.2 percent this year, 0.4 percent in 2013 and 1.2 percent in 2014."

SUMMING UP

Europe is an absolute economic and financial mess. That's clear.

For us, Europe should also serve as a great example of what not to do. We must not continue to expect government to provide goodies and not be willing as citizens to pay for them. There are no free lunches. Europe proves that every single day.

We should not allow the U.S. to get into a position where we've run out of credit and have to make a "come from behind" all out effort to bring spending under control in the midst of a prolonged recession.

In other words, we in the U.S. can and must use our time wisely to resolve the fiscal cliff issues otherwise facing us at year end. By so doing, we will be positioned to experience sustainable economic growth in 2013 and beyond, and which growth can only be made possible by private sector leadership.

Simply stated, we're not yet Europe, and we don't have to follow their example leading to a path to nowhere.

If our politicians come together and reach a common sense compromise about the fiscal cliff, we'll keep growing in 2013 and beyond.

My bet is that our pols will do just that as the consequences of a government caused financial debacle are too serious to contemplate.

In other words, the time to govern in a bipartisan manner is now upon us, and I'm betting that will happen. 

And if I'm wrong and our politicians yet again snatch defeat from the jaws of victory, it will be a sad day for all Americans. And perhaps an even sadder day for the rest of the world's citizens.

After all, globally we're all in this together, whether we like it or not.

Thanks. Bob.