The Belgian mess

One more guest post to come, plus a farewell; I had more of my own in mind, but I’ve overrun, again. It’s certainly been demanding, or stretching, and a sharp reminder of what I do and don’t know well, and can and can’t do well; but it was also enjoyable to blether away at you all. And I will half-miss the morning’s bleary thrash through 116 RSS feeds and whatever articles had eyecatching headlines, and nearly all of the NC comments. I haven’t done anything very like that since a not-terribly-successful stint at James Capel Gilts, 20-odd years ago; I doubt whether I have improved all that much at it in the mean time, either.

Anyway, Belgium.

In all the hubbub around Eurobank liquidity or solvency or whatever you thought it was, triggered by doubts about the ability of Greece and Spain to fund themselves, and possible sovereign defaults, one country, right at the heart of the EU, with a nasty problem, got largely overlooked. But not entirely: Tracy “Argus” Alloway of FT Alphaville managed to keep one of her innumerable beady eyes fixed firmly on Belgium.

The two main horrors are budget (FT AV quoting research house Independent Strategy):

Belgium is a mess. Its sovereign debt to GDP is 100%, up from a trough of 84% a few years ago, and its budget deficit is 5% of GDP.

but most of all political risk:

Unlike the Greeks, who seem to like being Greeks and being in Greece, Belgium is a country with a dearth of nationals proud to be Belgian and where growing swathes of the population want to be in another state of their own creation. This is not a good scenario for taking tough decisions on public debt at a national level and making the necessary political compromises…

Since May, when this article appeared, Belgium has exchanged a crippled coalition government for a crippled caretaker government, which isn’t progress; and the now-largest Flemish party, the New Flemish Alliance, is openly, though unhurriedly, secessionist. There are seven parties still negotiating to form a government, six weeks after the elections.

Nor, of course, has it made any difference to the underlying ethnic divide, which is spectacular. Belgium is pretty much two countries already, apart from Brussels itself, where French (Walloon, southern part) and Dutch (Flemish, northern part) speaking populations do mix, though Brussels is an enclave within the Flemish part, just to make things a bit more complicated. Away from Brussels, local governments in both Wallonia and Flanders can pass laws prohibiting the use of the minority language, and they do. Not much sign of common national feeling there.

The new pressure on this rickety political entity now arrives in the form of a leak from the Belgian independent budget watchdog. From the FT:

The solidity of Belgium’s public finances was called into question on Tuesday after an independent budget watchdog challenged the government’s tax revenue forecasts and warned of higher budget deficits.

The leaked report from the federal government’s monitoring committee raises questions as to whether Belgium can meet commitments to bring its public finances in line with eurozone budget rules.

Cue, naturally enough, both despair about the institutional capacity to meet the budget commitments:

“In normal times, taking such measures might be straightforward,” said Philippe Ledent, economist at ING Belgium. “The problem now is that there is no government that can take them.”

and a likely sharpening of the ethnic divide:

The way in which public spending could be cut dominated the electoral campaign in Dutch-speaking Flanders, with a consensus for more belt-tightening seen across most of the political spectrum. But the issue hardly featured in Francophone Wallonia, where the victorious Socialist party has vowed to oppose any form of budget austerity.

It’s ironic that having waved Belgium into the Euro, based on its centrality to Europe, one of the original Six, integral with Benelux, and so on, the pols could hardly reject Greece et al for budget dodginess (h/t MA for this reminder). Now it’s all coming back to Belgium.

So where do we go from here? The issue will get right onto the market’s radar eventually; and it looks much less short-term tractable than the Greek or Spanish situations. If there is to be a divorce, there will be a good tussle over the ownership of the assets first; or rather, over that 100%-of-GDP debt.

For much, much more on how Belgium got to be like that, on the mean and very long-term ethnic grudge match going on behind the scenes, and on what might happen next, try this from Bedlam (hat tip: Scott F.).

Update: But the Bedlam piece gets the identity of the largest Flemish party wrong (it’s the Nieuw-Vlaamse Alliantie, not Vlaams Belang) and NATO is staying in Brussels.

Top excerpt:

There is a growing risk of a faster than expected dissolution of Belgium which will result in sovereign default; this is based on a belief in the inability of the individual nations within the euro zone, let alone the EU institutions themselves, to realise that as nations unravel, speed is of the essence.

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    1. Captain Teeb

      Indeed. It’s just on the fault line.

      Both Belgium and the EU are unbalanced structures, getting more unbalanced all the time. A gradual re-balancing is possible, but that’s not the way to place your bets.

  1. michel

    The problem is obviously that they do not control their own borders or their own currency. What they need is to split in two, then the Flemish could control the north, with its borders and a currency, and the French could control the south, also with borders, tariffs and a currency. And then they could both invoke MMT and the deficit would vanish, and become self sufficient and opt out from globalization and the EC and all the rest of that stuff, and all would be well.

  2. Diego Méndez

    There is a big difference between massively voting for a party supporting seccesion and massively supporting seccession.

    It’s a difference you must be (Continental) European to get.

    A bit like monarchy. Swedes had been voting for decades for an anti-monarchy party (the Social-Democrats, who were pro-Republic). But Swedes have always supported monarchy. So in the end, it was the party which changed its views and re-labeled as monarchist.

  3. a

    A budget deficit of 5% GDP constitutes a *mess*? Ye gods, that’s about the best in the West, with many other states running at more than twice that.

    1. Diego Méndez

      The real mess is having a 5% GDP deficit when your sovereign debt to GDP *already* is 100%.

      That’s about the worst in the West, with many other states running at less than half that.

      1. a

        Italy is worse on both counts, and Italy is the best of the worst, unnoticed while Spain and Portugal made the markets tremble.

        1. Diego Méndez

          Anyone is free to choose their worries and their consolations…

          Unfortunately, Italy and Belgium have by far the worst debt to GDP ratios. You can take the fact that the markets haven’t noticed yet as your own consolation… but they didn’t notice subprime mortgages ’til the very last moment, didn’t they?

  4. Miel Marie

    Diego has it right. And the problem is in Belgium that ALL matters do have implications and links with the internal Belgian North-South problem. The North (Dutch speaking part, 65 % of the population) being social-liberal, more “scandinavian” oriented, and the South (French speaking) being socialist, more roman-miditerranean oriented). (F-)Actually, there are two countries in Belgian, and this cannot last.

  5. dearieme

    So the Flemings were happy to be subsidised while “iron, steel, coal and heavy industry” flourished in Wallonia, but aren’t keen to subsidise the Walloons now. It’s rather like the southern English being subsidised by the Scots and northeners, but unhappy to return the favour now.

    Anyway, it should be remembered that the direction of subsidies doesn’t always become clear until after a break-up. The Irish electorate was assured by their nationalist politicians that they had been subsidising the British until independence revealed that the subsidies had been flowing in the other direction.

    1. Captain Teeb

      “but unhappy to return the favour now.”

      Those stingy Dutch-speakers. The Belgian constitution was published in French in 1830, while an official Dutch translation had to wait 130 years, until 1960. No Dutch-language coins were issued by Belgium until about 1910 (and those were just collector items). Walloons dominated government, the professions, and the officer corps of the army. I think that the Flemings would gladly have done without the favor, had they been given the choice.

    2. Scrutinizer

      Nopes. Throughout history Flanders has always been the more prosperous region, save for a very brief period of a few decades when coal was discovered in Wallonia and this lead to an iron and coal industry. HOWEVER, there was no social welfare state in those days, so whereas indeed Wallonia was more propsperous during those few decades, there never was any massive transfer of funds to Flanders, other of course than that of Flemish migrant workers who decided to go work in the mines and the steel industry in Wallonia where there were jobs. Today however (and we don’t need to blame the Walloon people for that but rather the social system) Walloons have no incentive whatsoever to move to Flanders and get a job. They’d rather be unemployed and cash a check paid for by the Flemish taxpayer than contribute to the nation’s GDP. Either way, whereas Wallonia indeed was once the more prosperous region, it never sibsidiezed Flanders, although Wallon politicians (as well as theire Flemish “Belgicist” allies in both politics and the media) will do anything to keep this myth alive.

    3. Hendrik1729

      I have to disappoint you. In the 180 years of existence of Belgium, not a penny has ever been transferred from the south to the north of the country. Source : the accounts of the National bank. This is corroborated by many studies carried out as well by various research institutes as well by university professors from different origins. The point is the Flemish have always been treated as paisants and by now, they have had it to pay for people who look down on them and have denied their constitutional rights for almost 2 centuries now. Do you deem it to be normal that the first official translation of the Belgian constitution in Dutch was issued in 1967 while the country was founded in 1830? Or that getting higher education in their mothertongue was not possible for the Flemish during the first century of the country’s existence?

  6. Kevin de Bruxelles

    First off, there were a couple glaring errors in the linked to report by Bedlam. It was NOT the right wing (by European standards) Vlaams Belang who won 27 seats in the latest election; it was the more moderate Nieuw-Vlaamse Alliantie. And Germany is not trying to take NATO away from Brussels; in fact a huge contract was just signed to build a spectacular (and exceedingly very well designed!) new headquarters for NATO in Brussels.

    And the language issues in Belgium are being exaggerated. Almost all professional people speak at least three languages here, Flemish, French and English. In Brussels there is the problem in the Flemish language schools in that the vast majority of students come from French speaking households. In other words the French-speaking parents want their children to be at least bilingual right from the start. A Flemish friend of mine complained that his kid came home speaking French because at recess that is the language of the playground! In our French-speaking school the kids start learning Flemish in pre-school and they have immersion classes starting in third grade. However there is a problem in the supposedly Flemish-speaking suburbs that ring Brussels in that there is some serious Francophone-creep (as unfortunately Brussels is becoming too expensive for middle class Belgians) and so some of these communities have imposed draconian language laws to keep their Flemish character.

    The problems in Belgium have to be seen through a certain perspective. First of all as the Euro flirts with the 1.30 mark against the dollar it is time for Europe, with a huge assist from Anglo Saxon media sources, to manufacture a new European “bimbo eruption” to help keep the Euro down. The Europeans have gotten as much mileage as they can from the Southern and Eastern countries and so some new financial bimbos are needed to help tamp down the Euro’s value. But it is going to take a lot of work to convince people of the impending financial catastrophe with Belgium running a whopping 5% deficit

    But that is not to say that there are not problems in Belgium. In terms of the deficit it is glaringly obvious that there are far too many slackers in Wallonia who are on the dole but still working side jobs and getting paid twice. In Flanders they have had a shortage of labour over the past decade and instead of supposedly out-of-work Walloons moving North to take these jobs, the Flemish have had to import culturally alien North Africans while still sending dole payments to the francophone South. This obviously pisses off the hard-working Flemish and is the very root of the problems of Belgium. Anecdotally, a Walloon friend of mine was over this weekend and he told me of a street in his hometown where of the ten houses, nine families were on the dole (and many working illegally) and only one family was working legally and in theory supporting the rest. Since the Flemish are holding all the cards in terms of power, one way or the other, be it within Belgium or in their own entity, the Walloons will have to cave in and get off their collective asses and get back to work. Nothing will destroy a welfare state faster than lazy cheaters.

    With the success of the European Union over the past fifty years towards creating a Federal Europe, it is natural that people in some of the less cohesive nation states to start looking at their own national federal governments with questioning eyes. Belgium is the first but look to see similar movements in Spain and the UK. The normal situation is to have three levels of government, (local, regional, and federal) but now in Europe there are four levels (local, regional, federal and European).

    So the push for Flemish independence is exactly the mechanism needed to solve Belgium’s problems. One way or the other the Walloons will have to get serious about working hard in order to ensure the health of their welfare state. And they only have the examples of the United States and Latin America to contemplate if they do not reform.

    1. Richard Smith

      Kevin, yes, spotted that error about the parties in the Bedlam piece and then didn’t highlight it in mine. Something to grind my teeth over.

      Your point about the markets’ search for the next Euroweakness is correct. The question is, if they look in Belgium, will they find it? Precedent since the 1830s says Belgium bodges its way along quite cheerfully. But will Belgium be Taleb’s turkey this time?

      On the UK: until recently anyway, Scots have looked at Ireland and suspected they were in the wrong currency union. Let us see what Irish and UK austerity budgets now do to Scottish and Welsh attitudes.

      1. Kevin de Bruxelles

        But will Belgium be Taleb’s turkey this time?

        It’s a good question and in order to answer it we have to dismantle one of the main arguments of the Bedlam piece; namely that Brussels is going to start losing international institutions.

        Because if we ignore the tiny German section, Belgium basically breaks down into three parts: Flanders, Brussels, and Wallonia. There can be no question that Flanders is one of the economically most healthy and prosperous regions in the world, let alone Europe. But as the Bedlam article correctly points out, Brussels is also an exceptionally wealthy city due to the fact that so many international institutions are located here. (One aside though, Brussels is quickly becoming socially divided between the very wealthy eastern communes, populated by many European and American immigrants; and the poorer, heavily third world immigrant, western communes). This leaves Wallonia, which is basically the equivalent of the rust belt (Michigan / Ohio) in the US. So we have two exceptionally prosperous regions along with one slacking region.

        But its obvious that Wallonia’s economy is not THAT horrific to bring down the other two more prosperous sections of Belgian so the Bedlam guys had to conjure the spectre of Brussels losing its institutions to sell their story. Now if the Belgian authorities don’t get a handle on the widening social cleavage in Brussels then maybe ten to twenty years down the road, these institutions may think about leaving due to rising crime, but this prospect lies well into the medium term.

        The fact is that Wallonia is just not messed up enough to bring the whole ship down. And what signs I do see is that many Walloons are beginning to recognize their issues and the discussion over Flemish independence will only push them harder to get back on the path to prosperity. The one huge problem on the political level is that I have no confidence that the French-speaking Socialists are going to face reality any time soon. But if Belgium does start creating problems for Europe then the Socialists will come under huge pressure to set things right.

        (BTW I think you and Ed and the others did a great job running the show for the past few weeks).

        1. Richard Smith

          “The one huge problem on the political level is that I have no confidence that the French-speaking Socialists are going to face reality any time soon. But if Belgium does start creating problems for Europe then the Socialists will come under huge pressure to set things right.”

          The nub of it – how much is posturing and will the French speaking socialists blink, in time? I think this is a problem for the short term.

          I suspect it would take a real brute of a recession to curtail the money flows into Brussels, so that bit of the Bedlam argument is kind of medium term at best (or just plain shaky…).

          Thanks for the thanks. Something of an eye opener to do this everyday. The efficiency and work rate of the usual incumbent is pretty astonishing.

    2. Captain Teeb

      “Almost all professional people speak at least three languages here, Flemish, French and English.”

      Not a bad summary, though my own experience is that francophone professionals rarely have a decent level of Dutch. Try calling 10 francophone doctors in Brussels and addressing them in Dutch. Pretty much any Flemish doctor in Belgium could pass for American, while even plumbers and bus drivers in Flanders speak very good English.

      The elephantine question here, rarely voiced, is why, precisely, is Flanders so much more successful than Wallonia? I submit that the Flemish mastery of English has been their ticket to the world, not only nowadays, but for centuries (witness the longstanding links between England and Flanders).

      Your comment on how many Walloons are on the dole was news to me, but not surprising. After unimpressive trips to Charleroi, Liege, Namur, and Bouillon, I avoid Wallonia. The question is: what would it take to get the Walloons to act like the Dutch and be hard-working entrepreneurs? Is it even possible?

      This question, as one poster noted, goes beyond Belgium. It is Europe in miniature; Belgium just happens to sit on the fault line.

      1. Kevin de Bruxelles

        On the linguistic abilities of French speaking professionals I should have qualified it by age group. Certainly French speaking professionals in their fifties and above tend to be quite monolingual. But, at least in my field, architecture, all the young people coming up (35 and younger) are quite good in all three languages. Normally these people have studied for several years in Flanders, or took, for example, primary school in Flemish. The people between 35-50 are a bit hit and miss.

        One of the main reasons the Flemish are better in English is that they do not dub the American TV shows that are ubiquitous on their channels, while the French still do. Also English is in the same language group as Flemish so it is easier for them; although that of course doesn’t explain their ability in French.

        I was at a dinner party recently with several Flemish couples and it was interesting to hear them talk about how they wanted their children to have English as their first foreign language and not French.

        As to why Flanders is so successful it is very hard to answer. They have historically almost always done well. But just a hundred years ago I’m sure their French overlords were complaining about what a bunch of useless peasants they were. For two millennia, Latin and Germanic Europe have been struggling for mastery, with each side taking the lead at different times (with England, off to the side, being a strange mix of the two cultures). The German portions needed a Latin Emperor named Napoleon to wake them out of their cultural slumber in the beginning of the 19th century. So maybe, on a much reduced scale, the recent economic issues will wake Latin Europe a little, although admittedly they are not that far behind Germanic Europe.

        But we have to keep things in perspective. I call the area south of Brussels into Northern France “War Country” (similar to Wine Country for the area north of San Francisco) because there are so many battlefields, stretching back for at least a thousand years, in this area. The recent problems show no signs of evolving into real wars and so hopefully a little economic competition will push people to better themselves, while still maintaining their various cultural identities.

        1. Gerard

          ‘all the young people coming up (35 and younger) are quite good in all three languages’

          BEEEEP, wrong…

          I live in Brussels and the majority of french speaking professionals do not speak dutch… I think that this is THE problem in Belgium. The Walloon people are not able to read Flemish newspapers and do have a wrong idea of the Flemish people. Most of the Flemish people do not want to split up Belgium (which has been shown in several studies) more information can be found on another reaction of mine on this page). It are the Walloon politicians who spread this absurd message… And the international press (who mainly speaks french) spread the same wrong message. It is sad: because most of the Flemish people want Belgium to be a strong country. And yes they want to help the Walloon part. And as all good friends do when they help: sometimes one has to be honest and say how things are. And in Belgium this means that the Flemish part tells the Walloon part that their economy is not doing that well… But that does not mean that they want to split up… Let’s hope the socialist party in the South gets the message…

        2. Captain Teeb

          “I’m sure their French overlords were complaining about what a bunch of useless peasants they were.”

          Perhaps, but the Flemish were the oppressed underclass, so perhaps it was passive resistance. As a group, the Dutch-speaking peoples have been rich traders for about five centuries (check out Simon Schama’s “An Embarrassment of Riches”, a lovely book, for more info; BTW, there is a Dutch translation available as well). I think that we have to look beyond Belgium, to the cultural differences between the Netherlands and France, which are enormous.

          I appreciate your thoughtful and well-written response, BTW. Such things are rare these days.

          I have to agree with Gerard on Walloons-who-speak-Dutch, however. The usual francophone reaction to my telling them that I am working on my Dutch is ‘why do that? all the Flemings speak English’. My Dutch classes are generally filled with non-Belgians: the moslem and African immigrants readily grasp that the languages of economic mobility are Dutch and English. It’s really a shame, as I would like to see Wallonia do well.

          1. kevin de bruxelles

            Thanks Capt.

            I think the difference between Gerald and me is that in the end I am really just talking about Brussels (since that’s all I know about) while he is right about Wallonia, where from what I understand they do not speak much Flemish. I should have narrowed my statement a bit more, But in Brussels there is a very serious effort on the part of French speaking people to learn Flemish.

          2. Anonymous Jones

            I’ve missed your commentary as well, KdB. I always feel grateful for the slight lift out of my well of ignorance.

      2. Hendrik1729

        The reason for the poor knowledge of foreign languages of the Walloons is caused by their feeling of superiority. The same goes for the French : when I was still working for a French multinational, the management ordered for an investigation on the knowledge of English ( THE businesslanguage of today ) on managerial level within that Cy. They scored 5% for French native speakers and 99% for Dutch native speakers. There is a huge difference in culture in general. In Wallonia, 40% of the potentially active population is government employed, in Flanders 25% ( which is also far too high according to my point of view ) Unemployment in Wallonia : over 15%, Brussels over 20% ( and primarily north African young immigrants ), Flanders 7.5%. This means that in Wallonia 55% of all inhabitants at working age are paid by the government. Each year, about 14 billion€ ( or roughly 18 billion US$ ) are being transferred from Flanders to Wallonia/Brussels – the Walloons call this “solidarity”. That is 2300€ per Flemish inhabitant ( young and old included ) or 10.000€ per average household per year. The Flemish have no problem with people having another culture or point of view, but they have if this is being done 1) on their expenses to such an extent and 2) at the same time they are still being treated as paisants by the Walloons who are being supported by them. This is what is at the root cause of the changing of the census results and the shift towards secession.

  7. Olivier

    Sorry to say, but again a typical article and dido comments of people that don’t live in Belgium and don’t have a clue of how complex our situation is.

    All might be logical and rational to say that Belgium should split up (and I would agree with that if we didn’t have the ethnical complexity as we have it today) but most forget that Belgium has 1 big problem: Brussels.

    Brussels is flemish territory but inhabited by 80% wallon (french speaking) people. Belgium consists out of 60-65% Flemish speaking vs. 40 – 35% french speaking people. In other words, the french speaking part is a protected (through human rights) minority in Belgium.

    Op top, the political system is a mess and doesn’t work. However to reform the state & hence the political system we need a 2/3 majority for which the french part is required.

    To make a long story short: this is a catch 22 situation. And splitting up Belgium is a utophia… People believing in that scenario are naieve and demonstrate their lack in knowing Belgium and it’s situation.

    However, that doesn’t change the fact that politically & budgetary the country is a mess and that the government has a responsibility towards the people to change, to reform the state!
    But changing is something politician don’t like to hear as it affects their wallet…

    for what’s it worth…

    1. Captain Teeb

      You must be a Walloon.

      I’ve lived here in Brussels 12 years now, learned both French and Dutch. Flemings always speak 3 languages, with English that is of native-speaker quality. Educated Walloons can usually manage intelligible English, but rarely decent Dutch. The ordinary Walloon is monolingual. There’s no such thing as a Belgian.

      Change is accelerated in a crisis. The financial crisis may be just what Flanders needs to shake off the yoke.

      For you readers outside of Belgium, I suggest an easy exercise in the difference between French and Dutch culture. Visit Liege, then go a few kilometers to the Dutch city of Maastricht. Compare the two and you will know all that you need to know on the subject.

      1. superman

        Any chance of an uprising? Do you have the right to own arms in Belgium?

        Sounds like politically the norm will never end.

        1. Hendrik1729

          Yes, you can but legislation is tough. I think – if no solutions for the pending Belgian problems are being found or can be negotiated during the ongoing government formation talks – that the creditors of the sovereign debt will trigger the split of the land, no need for arms.

      2. Hendrik1729

        Being an expatriated Dutch speaking Belgian, I fully underwrite your analysis. My experience is exactly the same as what you describe. It will not be the Belgian politicians who will trigger the split up the country, it will be done by the foreign creditors of the sovereign debt. I saw this coming, and I relocated to South Africa. I was fed up paying taxes for people who have never worked, never paid any taxes and never intend to do so but keep speaking of “solidarity”. At present, if the socialists do not change their attitude, NVA has the power to block the formation of a working government and a reform of the Belgian institutions. The consequence would then be a bankrupt federal government and an implosion of the social system within 2 years. Greece revisited.

  8. Vinny

    And what does seeing the seat of EU’s capital utterly unable to get along based on nationalistic grounds say about the viability of the European Union project ?

    My question to proud (and pathetic) Europeans everywhere: When are you going to get your heads out of your asses, and show at least that you are trying to move past your land-based feudal mentality and 12th centurish nationalistic backwardness?


    1. Captain Teeb

      Don’t knock until you’ve tried it. There is freedom in fragmentation.

      Here in Europe, if I don’t like one country I move a few miles and be in another one, with completely different laws, taxes, food, stuff in the stores, education, healthcare systems, and even people’s attitudes. I have choices.

      No US-style homogeneity from sea to shining sea.

      1. Scrutinizer

        I wish that were still the case, but the fact is that currently over 70% of all new legislation in any member state comes from the EU level and this was before the signing of the Treason of Lisbon which went into effect on Dec. 1st last year, and through signing of which member states basically gave up their national sovereignty. So the percentage of laws coming from the supranational level can only be expected to increase and EU harmonisation to be accelerated, so that effectively we’ll soon be living in a monolithic bloc not unlike the US which you -like me- dislike for that very reason. On a personal note: I’m seriously contemplating relocation to a country outside the union (after having enjoyed living in 6 EU countries throughout my life to this point).

    2. Yearning to Learn

      My question to proud (and pathetic) Europeans everywhere: When are you going to get your heads out of your asses, and show at least that you are trying to move past your land-based feudal mentality and 12th centurish nationalistic backwardness?

      A bit harsh, no?
      are we any “better” here in America? Have we gotten our heads out of our asses and embraced our neighbors such as the Mexicans? Do we have no cultural infighting between the coastal and flyover-land populations, or North vs South, or Dem vs Repub?

      obviously, in some ways the Europeans have more that divides them from one another than that which divides American States from other States. However, I would say our nationalistic pride at least matches their nationalistic backwardness, and in some ways it is worst.

      Because last I checked, anybody in an EU country can work in any other EU country. This is not the same for NAFTA citizens.

      The largest advantage that we have compared to them is our unity of Language IMO. Imagine an America with 10 different zones that spoke different languages. For instance, if they spoke English in New England, Dutch in the NYC-DC corridor, French in the Rust Belt, Norwegian in the Upper Midwest, Spanish in the Sunbelt, and so on. Yes, obviously we have a lot of non-English Speakers in America, but they are by far in the minority and they learn the dominant language which is English even though it is not technically our national language.

      1. Vinny

        Good points.

        I’m just trying to get a reaction… :)

        I live about 6 months a year in the US and the rest in Europe. I find nationalism to be much more prevalent and deeply-rooted in Europe than in the US, which then leads to other problems such as discrimination among nationals of the different EU nations. I don’t find the US to be very nationalistic. After 9/11, there were US flags popping up everywhere, but those flags have since long disappeared without a trace. Patriotism and nationalism are much more chronic (and dangerous) in Europe, going back hundreds and hundreds of years, and continuously being reinforced by the different languages and high regional differences.

        Europe looks good mainly in theory, however there is very, very little true “European integration” among the 27 states. The same with the languages. Last I checked there were over 30 “official” languages in the EU. It’s absurd, and yes, translation is big business down in in Brussels. It’s like the “founding bureaucrats” of the EU wanted to have their cake and eat it too. They wanted some kind of union in order to keep up with the US, China, India, and Russia, but just could not give up on nationalism. However, European nations need to decide whether they will cling onto fragmentation and start descending toward third world status, as China and others rise toward first world status, or swallow this bitter pill and implement true integration, and survive the New World Order. This Euro crisis seems to have been a missed opportunity.

        For some reason, Europe seems very appealing to Americans. Perhaps because Europe is such a nice tourist trap. And it has to be, since nations like France, Italy, Greece, derive so much of their GDP from happy American and Japanese tourists spending lots and lots of their hard earned money on $15 cups of cappuccino in places like the Latin Quarter in Paris.

        However, despite Europe being a nice tourist spot for Americans, I wonder how many Americans also realize just how hard life can be for Europeans. Salaries are ridiculously low in Europe. 25,000 or 30,000 Euros is considered a great yearly salary for an engineer in Spain or France. A Silicon Valley counterpart earns that in 4 months or less. At the same time, rent, food, and energy (gasoline, heating gas) are 2 to 3 times more expensive in Europe than in the US. Life is hard in Europe my friend.

        Nonetheless, Europe does have some advantages also. Their medical system is generally better organized and offers access to every member of society. Getting a university education is not nearly as expensive as it is in the US. Social security in general is more “secure” than in the US. Of course, with these austerity measures, things may change, but until recently these were definite advantages.

        So there, I’ve outlined the pluses and the minuses. Nobody can’t say I’m not “Fair and Balanced”… just like on the O’Reilly Factor…lol


        1. Captain Teeb

          I’ll concede your point about low salaries in Southern Europe. But those are the sick economies, aren’t they?

          You’ll find that Northern Europe is more like the US, especially after converting euro salaries to dollars. Taxes are high, it’s true, but the state pays for a lot. The tax burden in the US (for ordinary folks) is also high, but includes very little (protection from the Afghans?) Also, most of Europe is not as expensive as the tourist circuit (for which Brussels, blessedly, is but a minor detour).

          It’s a question of taste. I don’t see a lot of Europeans yearning to live in America, the way one might have a century ago.

          1. Jim

            Here are the per-capita GDP-PPP (2007) figures that I have in front of me, mixing US states and European countries:

            WASHINGTON, DC $159,480
            Luxembourg $79,422
            DELAWARE $69,520
            Ireland $46,628
            US-AVERAGE $45,564
            Netherlands $38,955
            Sweden $37,482
            Denmark $37,179
            KENTUCKY $36,352
            Belgium $36,229
            Finland $35,965
            U.K. $35,047
            Germany $34,065
            Spain $33,648
            ARKANSAS $33,643
            France $32,565
            WEST VIRGINIA $31,849
            Italy $30,956
            Greece $30,599
            MISSISSIPPI $30,337
            EU-Average $29,423
            Portugal $21,827

          2. Vinny

            It would have been nice if Europe would have implemented tighter integration, so that situations such as this crisis would not sink some nations while raising others. If Spain starts falling apart and becomes poorer, it won’t be very safe for Germans to retire there anymore (lest they don’t mind finding their BMW’s tires cut by some hungry/angry Spaniard every morning).

            By the way, today I saw a report on CNN about how more and more Irish (from Ireland) are now planning to go to the US and stay there illegally, because the job situation in Ireland is so bad.

            And, a few hours later, also on CNN, I saw another report about illegal Mexicans from the US who are now going back to Mexico because the job situation is so bad in the US.

            I tell ya, the world’s gone nuts!…lol


          3. Vinny


            So the EU average is lower than Mississippi? Or Greece? That EU average must include Eastern Europe, I imagine.

            In any event, I imagine those overblown Irish salaries must have deflated quite a bit these past 3 years. Greece’s too.

            Oh, and those DC salaries… Wow! They must be doing some important work down there…lol


        2. Yearning to Learn

          Vinny, I don’t disagree with your follow up post. Life can be hard in Europe as it is in the US. It’s of course different though. one thing that I found that makes it more tolerable in Europe is that the income disparity is not so great as it is in the US. doesn’t seem as bad when most people are in your position.

          FWIW: My first language was German (although now mostly forgotten), some of my relatives are still in Austria/Southern Germany, and I lived/studied in France in the early 1990’s so I understand the challenges of living in the Eurozone.

          1. Vinny

            One thing I like about Europe is the significantly better social/medical security. That’s one reason why I maintain dual citizenship. If I were to need serious medical treatment, I’d get on a plane and take care of it in Europe. That’s a big plus for Europe, I think.

            What I like about the US is that you can go anywhere and still be in the same country. I could leave New York and move to California, exchange my NY drivers license for a CA one, and be as much a Californian as anybody else. In Europe, if you move from Germany to Spain to get more sunshine you automatically become a foreigner too.


    3. Hendrik1729

      I would like to remind you that the people now inhabiting the USA came for the most part from .. Europe, and that within the US of A, the differences between the various states are at least as big as in Europe. What the EU does not (yet) have is a EU army, a “real” US president with the necessary authority and an effective EU government with a unified foreign policy.

  9. DownSouth


    Haven’t you given us a European example of what Ed Harrison has been hammering on for the past few days, and that is that inter-group tensions rise during times of economic hardship?

    1. Richard Smith


      There are plenty more – UK is a prospect too, as KdeB alludes to. I never got round to posting on that, couple of false starts.

      As it happens by descent I am quarter-Welsh (which hasn’t left much trace) and half-Scottish (which has); I’ve lived in England all my life. So I can get irritated by most of our local nationalisms without much effort; or get stereotyped.

      Anyhow I agree with KdeB or Ed that we’ll get some nationalist rumblings here when austerity bites, as well as the usual ethnic/immigrant ones.

      1. Captain Teeb

        Hold on to that austerity thought, and imagine that the Scots and Welsh had their own language that they invariably spoke at home (I know, Welsh revival is impressive), but that the English refused to learn at all. Imagine further that these English spit on the others’ culture while expecting to be subsidised by them. Now you’ve got the Flemings.

    2. i on the ball patriot

      YES! And if you want to create inter-group tensions intentionally then create intentional economic hard ship.

      The global wealthy ruling elite NOW FORMULA war on the past gains of peace, sanity, love and sharing continue, with more; debt trap bubble bombs, financial derivative bunker busters bombs, austerity and hate propaganda bombs, etc. The Belgium theater is now slated for battle intensification.

      As usual, the victims in the bombed countries, lost in the details, stay mired in the hate and fear induced battlefields.

      GLOBAL Operation Have Against Have Not continues …

      Only a GLOBAL response will thwart it …

      Deception is the strongest political force on the planet.

  10. Gerard

    The whole article is based on wrong facts… The article states that the Vlaams Belang is the big winner of the elections. This (extremely pro-independence) party has lost 4% during the last elections. You can see the official results at the following web-page:

    The biggest Flemish party is now the NVA (New Flemish Alliance). A nice description of this party can be found on Wikipedia: . Note that Wikipedia states: ‘Furthermore, it emphasizes its non-revolutionary and pro-European character (as opposed to the far-right character of the Vlaams Belang) in order to legitimize increased Flemish autonomy.’ Although the parties manifest claims it to be a separatist party, a study from the biggest Flemish univerity (Katholieke Universiteit Leuven) shows that only 33% of the voters of the NVA is separatist. In fact in many interviews the NVA says that they want to convert Belgium in to a confederal state in stead of a federal state (so more power to the regions but still a state). To conclude: this means that merely 25 % of the Flemish voters (33% of NVA and all of the voters of Vlaams Belang) want to split up Belgium. 75% of the Flemish voters wants Belgium NOT to split up and think it is necessary to support the Walloon region.

    So, yes the financial situation of Belgium is not that good and the government should take action. But that is the case for most European countries. And no, there will not be a split up of belgium the next years…

    BTW: Note also that the NATO recently decided not to move to Germany…

    1. Richard Smith Post author

      Well, it’s the Bedlam article that is getting stuff wrong – I’m beginning to wish I hadn’t linked to it, actually.

      Concentrate on the parliamentary difficulties right now, and the apparently urgent need to reduce the deficit.

  11. casanova

    Belgium is a non-country, that is why the capital of europe is located there as no other country reflects better the future of the european project.
    lets face the facts, wallonia is a corrupt bunch of politicians holding (remeber scandals in Charleroi?)to their corrupt welfare lazy electorate at the expense of everybody else still working.
    Wallon coulture is no different than that of the lazy greek with the big difference that most walloons dont work at all, collect unemployment for life (only in belgium can you be born go to school and never work while collecting unemployment) and yes they are terribly racist towards the dutch.
    I have a frind of mine living in Charleroi, she has never worked nor does she intend to work. Reason : working you make less money than collecting unemplyment insurance or welfare. Talk about a welfare state. Someone needs to wake up and restructure this obese monster.

  12. Constant
    Transfers Vlaanderen- Wallonië: mythen en waarheid

    I tried the automatic translation in my Chrome browser and it rendered a fairly good result. The article is about Transfers Flanders-Wallonia: myths and truth.

    Also unemployment is dramatically higher in the Brussels region. High-tech firms go to Wallonia: Google, Microsoft ….
    Most of the replies are skewed in favour of the Flemish. Scandals and corruption exist in equal manner in the Flanders region.

    Constant from Antwerpen (Flanders)

  13. Nelcisco

    I really don’t get how a budget deficit of 5% GDP is considered a mess. OK, 100% of a countries sovereign debt thats another, but that 100% is their own debt, they can come together and hash it out, we’re in worse shape because its China that hold most of our debt.

  14. michel

    This is a serious question. What do the advocates of run your own currency in accordance with modern monetary policy prescribe for Belgium?

    If they are logical and consistent, they should prescribe splitting up the country and separate currencies for each and somewhow running deficits without selling government bonds. They should prescribe the exact same thing for Rhode Island, Illinois and California.

    Or, alternatively, state the guidelines and criteria for when this is the right course, and when it is not.

    This is a test case. If the emperor has clothes on, we should be able to see them in this light. Tell us, please, what Belgium should do here, and if it should not split and have two currencies, what exactly should it do?

  15. BelgianPEInvestor

    Of course it’s a difference thing if you taking the Belgian savings quota into account (we have a lot of dentists). Savings quota is at an all-time low for the moment, with Belgians saving only 13% of their heavily taxed income. Current Net Financial Assets of households in Belgium is around 300% of GDP. That is taking only financial assets (no housing assets) into account, and subtracting all debt (including housing).

    You can borrow 500.000 for a house with an income of 50.000, but borrowing 500.000 for a house with an income of 50.000 with 1.500.000 on your cash account is different (as long as your banks don’t go bankrupt of course).

    It would be interesting to see the Net Financial Debt (Household + Enterprise + Government Debt – Financial Assets) / Income ratio for different US states and EU countries.

  16. Meister

    Just to throw in my 5 cents worth…

    I have no hope for Belgium. The politicians that run this place have the romantic notion that this is the center of the universe that everyone wants to locate to regardless of the obstacles thrown their way. I generally love the place and its people, but after setting up a European HQ for an American company there I see so much red tape, taxes, laws, reporting requirements, provincial attitude etc that I will look for a new location as and when the opportunity arises. Doing business in Belgium requires a more than love for the place – it requires a suicidal and masochistic desire to work through all the problems that inevitably present themselves to a normal businessman.

    I think splitting up Belgium and starting over would be very good. In fact, the two parts should be added to the Northern and Southern neighbors.

  17. Galbulidae

    Does someone who read the Bedlam report know how they reached a debt sharing ratio of 35:65 Dutch/French?

    On which side of the ratio did they include Brussels, which has the same status of a “region” as Flanders and Wallonia in the Belgian constitution?

    Regarding the portion of debt attached to each region, the figures circulating in Belgium usually are: 24-30% for Wallonia, 20-10% for Brussels and 56-60% for Flanders.

    Did Bedlam decide to split Brussels in two and to share it between Walloons and Flemings (which would certainly not please the 90% French speakers inhabitants of Brussels)?

    Did they then invert the figures between Flemings and Walloons in the debt sharing ratio (the same way they inverted the results of the elections between Vlaams Belang and NVA)?

    Quite frankly, the lack of explanations to support dubious hypothesises and the number of inaccuracies and bold mistakes in that report are simply appalling…

    If someone can enlighten me about the way a debt sharing ratio is usually established, I would be very grateful though.

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