The European Union is in big trouble. The value of the euro is declining as the eurozone economy fell into deflation in February and the continent's immigration morass continues unabated.
The European Union was having a hard enough time before the immigration crisis got so bad. The formation of the currency union was expected to be followed by a political union that would bring together the continent's monetary policy and fiscal structure. Now, with the rising tension within the EU over how the immigration problem is to be resolved, the hurdles to real cohesion of member states are seemingly becoming more and more difficult to surmount.
Meanwhile, the value of the British currency is declining as the fear of Britain's exit from the European Union grows, as does the realization that a "Brexit" could weaken the entire union.
Financial markets are reflecting investors' increasing concerns about the fate of the eurozone and the broader European Union.
This is the age of globalization. More and more countries are engaged in trade, and financial markets tie almost every area together in a pretty seamless web, thanks especially to the Internet. There are major reasons for people to pull together and work out ways to make the evolving system function. Looking at the European situation, however, we see just how hard it is to bring sovereign nations together.
Wolfgang Münchau presents us, in the Financial Times, one of the more discouraging views of what might lie ahead for Europe and the U.K.
Münchau writes, "After nearly 60 years of European integration, we are entering the age of disintegration. It will not necessarily lead to a formal break-up of the EU -- this is extremely unlikely -- but it will make the EU less effective."
And, this condition makes it just that much more difficult for the British people, because "it is not clear what kind of EU" they are being asked to remain in, or leave.
How is the world to come closer together when countries like those in Europe, with all the best intentions, can't seem to pull off the trick?
The G20 summit just took place over the past week in Shanghai, and efforts were made to get member countries to pull together and coordinate more fiscal stimulus in order to supplement central banks' actions to get the world economy moving in the right direction and at a faster pace. The result of this meeting was a joint communications piece that implied all nations were in agreement and were doing their best.
A lot is going on in the global economy, but there obviously are some sticky points that have to be overcome.
In the next few months, the focus is going to be placed on Europe with specific attention given to the immigration situation and the vote on whether or not Britain will stay in the EU.
Unfortunately, in both cases, the issue of national sovereignty is going to be front and center, and this issue will flare up elsewhere in the world.
If Münchau is correct and we are entering an age of disintegration, then the world really faces some difficult times ahead. I don't think that we want to return to a period like the 1930s when countries isolated themselves, economically and politically, to preserve their national sovereignty.
This article is commentary by an independent contributor. At the time of publication, the author held no positions in the stocks mentioned.