EU Accelerating Toward Collapse: Merz, Draghi, and Lagarde Reveal Europe's Crisis Path, By Richard Miller (Londonistan)
Europe stands at a precipice, its economic and social foundations crumbling under the weight of misguided policies and disconnected leadership. Recent statements from German Chancellor Friedrich Merz, former ECB chief Mario Draghi, and current ECB President Christine Lagarde, expose a troubling trajectory: a blend of economic denial, centralising instincts, and refusal to confront harsh realities. The European Union is not merely stagnating, it is accelerating toward collapse.
At the CDU state party conference in Lower Saxony, Chancellor Friedrich Merz delivered a rare dose of candour: "The welfare state, as we have it today, is no longer financially sustainable given what we can deliver economically." This blunt admission cuts through the political sugar-coating that often obscures Germany's dire situation. With 5.6 million people receiving citizen welfare payments, many of whom, Merz noted, could work but do not, the system is buckling. Germany's GDP contracted again in Q2 2025, with the private economy shrinking at a staggering 4–5% rate. This is no mere recession; it's a depression.
Yet, Merz's critique lacks a bold pivot. There's no call for market-oriented reforms, reduced bureaucracy, or individual responsibility. Instead, the Chancellor's vague promise of "more" and "better" achievements hints at maintaining the status quo, more debt, more taxes, and more state intervention. Germany's so-called investment booster offers marginal relief, while new debt, projected at 3.5% of GDP this year, burdens an already strained economy. The absence of a clear plan signals a leadership adrift, acknowledging the problem but shying away from transformative solutions.
While Merz grapples with Germany's woes, Mario Draghi, the EU's perennial technocrat, doubles down on the very policies that have weakened Europe. His latest report calls for the EU to act as a single state to maintain geopolitical relevance, a familiar refrain from his days navigating the sovereign debt crisis. Draghi's vision is clear: more centralisation, less subsidiarity, and technocratic rule from Brussels. This approach, which concentrates power beyond democratic oversight, echoes the authoritarian tactics of the past, strict censorship, media manipulation, and silencing dissent to enforce a unified narrative.
Draghi's plan ignores the EU's fractured reality. Overregulation and a self-inflicted energy crisis have crippled industries, particularly in Germany, the bloc's economic engine. Centralisation hasn't solved these issues; it's exacerbated them. By pushing for more Brussels-led control, Draghi risks further alienating member states and citizens already sceptical of the EU's overreach.
ECB President Christine Lagarde's recent remarks at the Federal Reserve's Jackson Hole meeting add another layer to Europe's misdiagnosis. She argued that Europe's growth depends on massive migration, claiming Germany's GDP would be 6% lower without foreign workers since 2019. This assertion sidesteps inconvenient truths: Germany is in a depression, and migration has strained social systems and public safety. Lagarde's focus on labour shortages ignores technological solutions like AI and robotics, which could address workforce gaps without the cultural and security challenges posed by unchecked migration.
Her comments, delivered to a U.S. increasingly sceptical of open-border policies, landed flat. The U.S. is repatriating illegal migrants, signalling a rejection of the European model Lagarde champions. Her failure to address migration's complexities, cultural conflicts, political Islam, and social cohesion, reveals a leadership disconnected from the concerns of ordinary Europeans.
A Toxic Mix: Economic Decline and Political Denial
The convergence of Merz's warnings, Draghi's centralising agenda, and Lagarde's migration push, paints a grim picture. Europe's economy is collapsing under the weight of an energy crisis, overregulation, and unsustainable welfare systems. Social funds, strained by mass migration, teeter on the brink. Yet, the proposed solutions, more centralisation, more regulation, and more migration, double down on the policies driving the decline.
Finance Minister Lars Klingbeil's predictable calls for tax hikes further erode individual autonomy, treating citizens as mere revenue sources for an overreaching state. The audacity to target private property amid economic hardship meets little resistance, with Merz's CDU offering only a feeble defence. The political elite's fractured relationship with reality, evident in their refusal to confront economic data or public sentiment, hastens the EU's unravelling.
Conclusion: A Path to Ruin
Europe's leadership is steering the bloc toward collapse. Merz's acknowledgment of the welfare state's unsustainability is a start, but without bold reforms, it's mere rhetoric. Draghi's centralisation fetish and Lagarde's migration fixation, ignore the root causes of Europe's woes, overregulation, energy mismanagement, and cultural erosion. The EU's trajectory is clear: a deepening depression, strained social systems, and growing public discontent. Unless leaders confront reality with courage and embrace decentralised, market-driven solutions, the European project risks imploding under its own weight.
"The Chancellor seems to have collided with reality during the summer break. Merz sees the German social system in deep crisis. Meanwhile, his political allies in Brussels are calling for an increase in the very dose of poison that is making Europe sick.
Let's be blunt: Large parts of the political elite have a fractured relationship with reality. This applies equally to the economic decay of Germany and the EU, as well as to the public communication of strategic political goals, which are systematically obscured. Open criticism of the course could cause the political fairy tale to collapse faster than reality seeps into public opinion.
Merz and the Welfare State
All the more remarkable are the warning words of Chancellor Friedrich Merz during his Saturday appearance at the CDU state party conference in Lower Saxony. "I am not satisfied with what we have achieved so far – it must be more, it must be better."
Hear that! A faint tremor of self-criticism from the Chancellor. Rare, indeed. Yet the statement raises the question: what exactly does Merz mean by "achievements"? Is he referring to the so-called investment booster, supposedly providing marginal relief to the German economy while it teeters on collapse? Or does he mean the massive debt packages and widening financing gaps, most likely to be closed with tax hikes?
In his speech in Osnabrück, Merz later spoke unusually clearly about the state of the welfare system: "The welfare state, as we have it today, is no longer financially sustainable given what we can deliver economically." A blunt diagnosis, leaving little to be desired in clarity.
There was, however, no mention of a market-oriented turn, trust in individual solutions, personal responsibility, or rapid bureaucratic reduction. The message seems to be: stay the course.
Moments of Honesty
Merz also spoke unequivocally about citizen welfare payments: it cannot continue like this. 5.6 million people receive the payments. Many could work but do not, he said. A reality that politics usually avoids.
A tentative attempt to openly name the precarious state of German social insurance. In times when political sugar-coating is routine, it's almost a stroke of luck when a leading politician at least partially acknowledges economic realities.
Have the latest economic data perhaps shaken Merz and his colleagues in Berlin? GDP shrank again in the second quarter, and the outlook remains bleak. With the state intervening via massive credit programs and new debt hitting about 3.5% this year, the private economy is contracting at 4–5%. Calling this a recession would be euphemistic — we are in a depression.
More EU Centralism
While the Chancellor stumbled through Germany's harsh economic reality, EU representatives launched media trial balloons.
It was Mario Draghi, the EU's political all-rounder, who easily alternates between former Italian PM and ECB chief, presenting yet another report.
He reiterated his familiar demand: the European Union must act more cohesively, like a single state, if it wants to retain a geopolitical role.
More of the medicine that made Europe sick: more centralization, less subsidiarity, and intensified technocratic rule. Draghi once again demonstrates Brussels' plan — as during the sovereign debt crisis 15 years ago: power concentrated in Brussels, decisions outside democratic control, enforced by a political apparatus orchestrating media narratives. Strict censorship, media manipulation — dirty tools to silence opposition to centralization. The same authoritarian logic that worked then is being revived.
Lagarde and Migration
Draghi's ally, ECB President Christine Lagarde, also hit the media circuit. She touched on migration, a topic skilfully avoided or distorted in German politics and media.
Lagarde floated a trial balloon at the Federal Reserve meeting in Jackson Hole, subtly testing Europe's mood. According to her, Europe could no longer grow without massive migration (of which growth exactly?). She claimed Germany's GDP would be roughly six percent lower today than in 2019 without foreign workers.
That the country has been in a depression for some time seems not to have reached the ECB leadership. Then came the familiar trump card: without migration, the labor shortage cannot be addressed. No mention of technological advances via AI or robotics, which could offset labor shortages. No mention of migration as a security risk, of cultural conflicts, or a political Islam incompatible with European values.
Lagarde's stance was particularly striking as the U.S. begins repatriating illegal migrants, ending the Europeanization of American policy. Her speech in the land of rational awakening and political turnaround likely caused nothing but raised eyebrows.
Jackson Hole highlighted the EU's trajectory: open borders, elites ignoring risks, while the left expands its voter base at Europe's cultural and economic expense.
Bitter Balance
Combine the three events — Merz's speech, Lagarde in Jackson Hole, and Draghi's latest report — and the conclusion is alarming: the economy is accelerating toward collapse due to a self-inflicted energy crisis and overregulation. Social funds, strained by mass illegal migration, risk implosion. The proposed solution? Centralization, regulation, and continued unchecked migration.
Even Finance Minister Lars Klingbeil's usual tax hike debates fit seamlessly: the individual counts for nothing, the state controls everything, increasingly burdening citizens. The audacity to attack private property and raise taxes further is staggering, meeting little resistance. The Merz CDU has become a paper-thin bourgeois protective wall of hot air."
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