Daniel Mitchell has a good post connecting Europe’s impending doom to gun control. Read it.

However, that’s not what I’m writing about. Something Mitchell mentions reminded me of my own blog post from yesterday.

What made this conference remarkable was not the presentations, though they were generally quite interesting. The stunning part of the conference was learning – as part of casual conversation during breaks, meals, and other socializing time – how many rich people are planning for the eventual collapse of European society.

Not stagnation. Not gradual decline. Collapse.

Europe’s wealthy are looking around for new homes where they can fortify themselves like Roman latifundia 1,500 years ago. I think that’s hardly necessary and I touched upon it yesterday. Yes, Europe’s economy will eventually collapse no matter how much financial trickery is employed. Yes, this will lead to social upheaval but only for a time. Riots will be tolerated, but when it becomes the clear the crowds will not be satisfied with a few days of wanton destruction, the tanks will roll. Fascism will come back into style as European armies are put into action suppressing the dissent of unarmed civilians (it’s all they’re good for), and governments will step in to command the economy. Of course “fascism” will have a new, innocuous name, and these wealthy people will continue to live quite comfortably under this new system. After all, they’re probably hob-nobbing now with those future dictators.

The creation of Eurobonds will be a disaster.

I’m not equivocating. Under no circumstances will selling Eurobonds make things better. Yet people, who I am told are quite smart, keep pushing this idea as the solution to this European debt crisis. In this AP article, EU Commission President Barroso again calls for this new debt instrument to be created. Granted a Eurocrat isn’t impartial when it comes to more things getting the “Euro” prefix added, but go search the news. You’ll find a ton of, supposedly smart, politicians, bankers and traders out there demanding this.

So why are they all wrong? What you have to understand first is what a Eurobond does. A Eurobond would be a bond issued in the name of the European Union. In theory, all members would be on the hook for paying it back. It would pool the credit risk of all members, so those with bad credit would be able borrow money at lower rates because the members with good credit “co-signed” the bond. In reality, Germany is the only member state with good credit and enough money to pay back these Eurobonds, so Germany would be “co-signing” for all of Europe. The answer to why this will fail is in last week’s terrible performance at Germany’s auction for 10-year bonds. Germany alone could not generate enough interest in its own bonds. If Germany cannot find enough buyers for its own bonds, why would there be buyers for these German-backed Eurobonds?

There won’t be. So why do these people keep pushing for them? What I wrote above is no secret. I think for a lot of them the need for “ever greater union” for Europe is an article of faith, so they must use every chance they have to create new pan-European institutions. Who cares if the Eurobond plan fails. The point is to make the idea of pan-European bond realistic! That way they can be issued in the future after this crisis. Forget the worry that the Euro might be destroyed. For these people, the EU and the Euro are sacrosanct. They will preserve them at any cost. It doesn’t matter if that means bond defaults, industry nationalizations, suspension of democracy, martial law, anything.

The Germans are very fiscally conservative (duh!), so ultimately I don’t believe they will agree to Eurobonds unless those profligate spenders (Greece, Italy, Spain, Portugal) end up agreeing to become de-facto German protectorates. That name will never be used of course, but all the decisions for these countries will be made in Berlin (or possibly directly from Frankfurt). In this way, Germany will backstop the roll over of all these countries debts and quietly loot these nations in exchange.

But Eurobonds will fail, as I said above, yet I don’t think that failure will be the end. I think there will still be time for one more last-ditch, grasping-at-straws effort. Perhaps the Europeans will try some financial chicanery with the IMF. The ECB will sell those crap Eurobonds directly to the IMF. The IMF will pay with the SDRs it conjures up. The IMF will then change its rules to make SDRs freely convertible into Euros. The ECB will then let those new Euros pay off the debts of the new German protectorates. Sure this will inflate the Euro, but the Germans will agree because they will enjoy the hard assets they’re plundering from their new empire.

But this will fail too, or whatever real plan the European elite tries. What comes next, an end to the EU or a much more dictatorial one, depends on the European public. This is pure speculation of course. What I am convinced of is the utter failure of Eurobonds to end today’s crisis.

And so it begins…

Occupy flash mob fails to impress Walmart workers

The Occupy crowd threatened promised said they would do some protesting on Black Friday. I doubted it, but I’m glad to see I was wrong. I hope those smelly fools “occupy” everything. Disrupt checkout lines, crash through all the crowds waiting to get into stores. There’s no better way to make America hate you than to make the chaos of Black Friday even worse.

[European] labor laws induce sloth, indolence rather than hard working.

Jin Liqun, Chairman of the supervisory board of China Investment Corporation

In simplest terms, Europe wants China to bail them out. Would China do it? A disorderly, unmanaged Euro breakup would obliterate the European banking system, and bankrupt some big American banks too. The only reason I can think of as to why the Chinese would play along is to prevent more damage to the US economy. Too few realize China is having its own economic problems. That vaunted stimulus from a few years ago is coming home to roost. Inflation is an on-going problem and their residential real estate market is crashing. If a banking crisis spreads from Europe to America, then China has to also deal with falling exports.

I don’t think China wants an additional helping of crisis on its plate, so there’s a not insignificant chance they will ride to Europe’s rescue (and yet at the same time I still feel uncomfortable saying the chance is greater than 50%). But if they do come to the rescue, it’s a guarantee they’ll extract more than a pound of flesh for their kindness.

Thinking long-term, I wonder if this will lead to increased China/Russia tensions. The Russians may be suspicious of Chinese intentions in Europe. They might start to feel a bit boxed in. I guess that depends on what demands the Chinese make. Jin’s quote (along with a few others I’ve read over the past few weeks) makes me think China will rewrite Europe’s “Social Contract”. Kiss those six weeks of vacation goodbye.

Sloth. Indolence. I love the way they sound; so full of indignation and contempt. No other words could apply more to Europe.