Europe: a slow-motion tragedy

In all the excitement about the new Greek bail-out, something important is being missed. A slow motion human tragedy is unfolding across the peripheral nations of Europe.

I spent half-term on the Algarve in an almost-empty hotel. In the fields surrounding it, the oranges are rotting on the trees. I'm told they aren't being picked commercially because the market price isn't high enough to cover the labour and bureaucratic costs of selling them.

So they're only being picked by those desperate enough to try to sell them on the roadside. But while oranges are all but free on the Algarve, not much else is. Golf enthusiasts told me that the price of playing a round has doubled in the last few years, while the prices in cafs and restaurants seem to be near central London levels.

Subscribe to MoneyWeek

Subscribe to MoneyWeek today and get your first six magazine issues absolutely FREE

Get 6 issues free

Sign up to Money Morning

Don't miss the latest investment and personal finances news, market analysis, plus money-saving tips with our free twice-daily newsletter

Don't miss the latest investment and personal finances news, market analysis, plus money-saving tips with our free twice-daily newsletter

Sign up

Raising prices in the face of falling demand is clearly unconventional. But there is, we were told, a crazy rationale behind it. Service providers say they can't cut prices and stay solvent (labour costs, taxes and bureaucracy again).

But lack of demand also means they can't survive without more revenue. So they're trying another tactic: putting prices up in the hope that they won't lose too much custom along the way. Sadly, it isn't working. My children now associate Portugal with tinned spaghetti sauce rather than eating out.

This is all anecdotal and obviously fruit and holidays are hardly Portugal's only exports (it produces half the world's cork and is a major exporter of clothing, footwear and wine).

But what it does tell you, should you be in any doubt, is that Portugal's only way forward is serious devaluation. The same is true of Greece. There's much talk of how this devaluation can be internal (or fiscal). But look at the pain this is causing.

Youth unemployment is 35% in Portugal and 46% in Greece. Not enough newspapers are writing about this, but a piece by Ian Bell in Scotland's Herald offers some sad statistics statistics that all EU top management should have hung on the walls of their smart offices.

In 2008 Greece had the lowest suicide rate in Europe. It has doubled since. Drug use is rising fast. All child and psychiatric helplines have seen "unprecedented numbers of calls". There are 20,000 homeless people on the streets of Athens (the comparable number in London is 4,000). Break-in reports have doubled. Soup kitchens have sprung up across the Greek capital (the Archbishop of Athens runs 73), as they have in Lisbon, where, according to The Daily Telegraph, an estimated 200,000 people rely on them.

Europe's leaders (the Germans and the French) spend much of their time swearing that any break-up even into dual currency zones is unthinkable. They should stop thinking of the eurozone as a grand project and start seeing it as the unemployed of Greece and Portugal do: an utter disaster. Then they should get on with doing something about it.