Europe’s year

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ByGerry Hadden

Europe entered 2010 with no end in sight to the economic crisis. Iceland was among the worst off countries. Its banks had collapsed in 2008 and people were still losing their homes.

One Rekyavik resident sat in the kitchen of his rental home one snowy day recalling how he’d lost his house and his wife when the Icelandic Krona lost half its value.

“Just imagine all the sleepless nights over this. We are separated now. It’s just the stress of the whole thing. It is really hard to. You can’t plan for anything. The whole family life just goes to pieces.”

Elsewhere on Europe’s periphery things didn’t go much better this year when the Greek government finally admitted in April it didn’t have the cash to pay its bond-holders. The International Monetary Fund and the European Union offered Greece an unprecedented $60 billion bail-out.

All the member nations approved, including Europe’s healthiest economy, Germany. German Chancellor Angela Merkel hesitated but eventually came around.

She said, “this is an important decision that shows that we protect the euro’s value in the name of European citizens. But it will only work in combination with austerity measures.”

Those measures included cuts to Greek pensions and salaries and hikes in taxes.

Each new austerity measure provoked huge, sometimes violent protests. And Greeks aren’t just angry over the belt- tightening. They say corruption adds insult to injury. In fact, Greece became so indebted in part because an earlier government hid the country’s true finances from the world. The current Greek government is trying to crack down on corruption and tax cheats.

In May, a cab driver in Athens complained to me that the government was now making him document his earnings. Before, he lamented, no one checked.

Indeed 2010 saw tolerance for corruption run thin across Europe as citizens were asked to sacrifice more and more.

Consider the mayhem that ensued after Italian leader Silvio Berlusconi won a no-confidence vote this month. The scandal-plagued Prime Minister allegedly bought votes to stay in power.

This past fall brought more bad economic news to Europe when the 16 countries that use the euro had a second bailout. This one will prop up Ireland to the tune of 40 billion dollars. European leaders argued that, as with Greece, that they couldn’t afford to let a euro-member fail. If bond- holders get spooked again, Portugal, or even Spain, might face soaring interest rates on its debts. And bailouts can’t go on forever.

But 2010 is ending on at least one optimistic note. Remember Iceland which entered the year with a bad limp?

The man who lost his house said, “I am against the state taking on private debt.” He was a leader in a massive protest against a government bailout for failed, private banks.

And guess what? Iceland did not rescue its banks… It let them fail. Thus the govt avoided that huge debt and the sort of austerity measures seen other European had to take.

Meanwhile, Iceland’s devalued currency has helped boost exports. The European Commission now predicts that Iceland will run a budget surplus by the end of 2011. Download MP3