This week the European economy tanked. For decades Europe has been a socialist playground, touting the easy life for the citizens of the European Economic Community. In the last few months, it became apparent that the excesses of the past have caught up with some of the countries in the Eurozone. Financial analysts refer to these countries as PIIGS, an acronym for Portugal, Italy, Ireland, Greece and Spain. These economies are in a shambles with Greece being in the worst shape. This week the Federal Reserve acted to prop up their economies by swapping good dollars for bad Euros. President Obama stated that we must act to save Europe. ("The most important aspect of our task over the next two days is to resolve the financial crisis here in Europe"). The President is clearly wrong on this. Nothing can save Europe; all he can do is delay their fate.

Americans value the work ethic. While our unemployment is high, most of those between positions are willing to take any job that will help them support their families. In contrast, Europeans have been lazy since the early 1960s. As an example, let me cite their vacation entitlements. Four weeks vacation is the minimum standard in Europe. The average vacation is higher in many countries. For instance, France provides an average of 38 days vacation. When I look at the PIIGS, Portugal has 25 days vacation, Italy has 31 days, Ireland has 28, Greece has 25 and Spain has 30 days vacation. Meanwhile we hard-working Americans are only eligible for an average of 13 days vacation. In addition the Europeans have more statutory holidays than we have here in the US. In my opinion this demonstrates that we have a much stronger work ethic.It is clear that the Europeans love their leisure time. Their economies languish as a result. Companies are not only burdened by higher taxation, but worker benefits including vacation and holidays for their workers make them less competitive. Very high Value Added Taxes (VAT) that range from a low of 15 percent in Cyprus to a high of 25 percent in Denmark also hampers prosperity. These are point-of-sale taxes that are added to the cost of most purchases. When income taxes alone could not sustain frivolous government spending on social programs, the VAT was added. Many Europeans conduct all or part of their business in the underground economy (under-the-table-sales sometimes called "cash money" sales by the vendors) to avoid reporting income and the value-added taxes.With all of their taxes, Europe still cannot pay for their excesses. One by one, the European economies are failing. Greece is the first country to need a bailout. Their debt is almost worthless, their economy has stagnated and it is up to the rest of the world to bail them out. Italy, Spain, and Portugal are teetering on the brink of financial collapse. Politicians at home and abroad are calling on the United States to support the weak European currency and the Ponzi scheme like government debt of the Eurozone. (http://www.youtube.com/watch?v=LFYYrQLro9c). Without a bail out, European leaders are worried that there could be widespread rioting as a result of austerity programs. The citizens want their bread and circus and they are willing to rise up in protest and burn buildings to get it.America has weathered one of the worst recessions in a generation. Unemployment is at 9% nationally and higher in some states. Our national debt is over $15 trillion. We are almost bankrupt. The World Bank and truckloads of politicians still believe we should put additional strain on our economy so that we can bail out the laggards in Europe. Europeans have been partying for years, enjoying their vacations and the good life while we Americans have been working hard to support our families and our country. We cannot afford to bail out the Europeans nor should we. By supporting Europe we will be devaluing the dollar, increasing our cost of living and ultimately increasing taxes on our own citizens to pay for the excesses of the Europeans and their almost worthless money.It is time for Europe to pay for their own indolence. If they must default on their debt then so be it. US banks with large European debt exposure may have to fail as well. In their quest for supernormal profits, these banks took on risky foreign debt knowing that eventually the Ponzi scheme would crumble. The banks believed that they could make excessive profits in the short term. If the sovereign countries defaulted on their debt, the banks would be bailed out. The American banks had upside profits with little or no downside risk. As I write this, the six major US banks have had their debt ratings downgraded in recognition of the unacceptable sovereign debt risk they face. (Bank of America, Citigroup Inc., Goldman Sachs Group Inc., JPMorgan Chase & Co., Morgan Stanley, Bank of New York Mellon and Wells Fargo & Co). I expect more banks will be downgraded in the coming weeks.So what does this mean to you and I? As we pay for the European bailout, our dollar will be devalued. Our national debt rating could also be downgraded again, making it more expensive for us to borrow money. Many of us will have to work harder and longer to make ends meet. We will have to cut our budgets and trim our household spending. This means fewer vacations and less family time. Meanwhile the Europeans will still take their vacations, and work a shorter workweek than we do. (The average workweek in Europe is only 35 hours). Their lifestyle will not change provided America pays the bill. After all, they are used to and expect us to bail them out.In the First World War, 116,708 Americans died saving Europe from the Germans. We again rescued Europe from Germany during World War 2, with over 200,000 Americans giving their lives in the European Theatre. Germany was the enemy. In keeping with tradition, America is bailing out our European allies, this time with money printed by the Federal Reserve. The central banks of Canada, Japan, Switzerland and Great Britain joined in our effort to save them. Germany, the most successful and wealthiest of the European countries is strangely missing from this consortium. They have the funds to assist their fellow Europeans. They are part of the Common Market. Their currency is the Euro. Yet Germany has decided to let the rest of Europe fail.The Germans are the only ones using sound financial judgment. It is clear to them that bailing out the European laggards is just throwing good money after bad. Clearly, the Federal Reserve and our leaders should take a lesson from the German Bundesbank. The Bundesbank believes that to solve the crisis, the underlying problems that caused the crisis must be resolved. (http://www.bundesbank.de/presse/presse_aktuell.en.php#fsb). They are the only ones that have it right. Fix the problems; don't just throw money at them. Unfortunately, this week's actions by the Fed and other central banks just postpone the day of reckoning. Eventually the underlying economic flaws will have to be corrected. The question is how much of our money must be thrown away before the correct actions are taken? It is time for Europe to solve their problems by themselves. America can no longer fund Europe's economic disasters on the backs of our taxpayers. We have suffered enough to protect Europe and all of our efforts have failed. It is time for them to stand or fall on their own.Copyright 2011 Gordon Smith - All Rights Reserved