It would be unwise for anyone to expect the election of a new government in Greece to produce more than short-term respite from the spiral of decline which is gripping Europe, and which could yet tip the rest of the world into a serious recession.
That is the first and easiest observation, after spending two weeks in Europe gauging the mood of a region pretending to be a country but really no more than a group of nation states which long to reclaim their individuality.
The second observation, made safely from the Swedish capital, Stockholm, is that Australia has lessons to learn from the decline of Europe, especially the high price which eventually has to be paid if you create an unaffordable social welfare system.
Unravelling the absurdly generous terms of state-funded pension systems is the critical issue for Europe, and while there are plenty of people talking about it, not much is actually being done.
In France, a country yet to feel the full bite of a downturn caused by Europe losing its competitive edge with the rising powers of Asia, one of the first acts of its new President, Francoise Hollande, was to lower the retirement age for some civil servants from 62 to 60.
That astonishing decision in a country seen by some observers as the next to face an attack on its banks by international investment funds was to meet an election promise, perhaps one of the best examples of how the demands of the mob (sorry, voters) are totally removed from economic reality.
The gap between what’s happening on financial markets and what’s happening in corner markets of quaint European villages, and on street corners of major cities, is profound and unlikely to be resolved quickly, if at all.
While some people understand that Europe has effectively priced itself out of business, perhaps serving as a role model for Australia’s future, few understand the seriousness of the decline which is destroying once powerful companies.
Nokia, the mobile telephone champion of Finland, is a case study of what happens when a company fails to correctly identify its competition, and fails to produce products that consumers want to buy, mistakes that last week cost 10,000 jobs.
In Nokia’s case the competition was the rise of the smart phones and hand-held computer tablets produced by rivals such as Apple and Samsung.
For Europe, the problem is misreading changes underway at both a cost and quality level, a point made forcefully a few days ago by the Spanish owner of a supermarket chain.
Juan Roig, chairman of Mercadona, said that Spaniards simply had to stop living beyond their means, and lift their productivity – code for working harder, longer and for less pay; a recipe that the European mob will never accept without a revolution of some sort.
But, Roig’s argument went much further than simply saying costs were the key. He also touched on the quality question which is another issue which is even further removed from European thinking than the problem of being priced out of business.
The European attitude to competition from Asian manufacturers is a direct re-run of past attitudes in western countries; a stunningly naive view that goods and services from Asia are invariably sub-standard.
Perhaps early Japanese cars were not as good as a Fiat or Morris in the 1960s, but what happened after that is a case study in under-estimating a competitor and paying a fierce price.
Roig uses the example of a laptop computer to make his point. While Spaniards are lamenting the migration of jobs to China they retain a view that Chinese goods are of an inferior quality – until the “made in China” label is shown to them on the their laptops.
What has Europe’s malaise got to do with Australia? The answer is one of time. Just as Europe misread the danger signals of what happens when you are priced out of a market so too is Australia misreading the danger signals of overly-generous social welfare handouts and a failure to see that even a mining industry can move.
Obviously the mine itself can’t move, but the capital which pays for a new mine certainly can and the higher costs rise in the Australian resources sector the more tempting it is for the next generation of mines to be located in South America, Africa, or Asia.
Australia’s day of reckoning is some time off, but if we ignore the lessons of Europe we will repeat them.