About the only thing we are sure of is that something terrible happened in the town of Hamelin, Germany, in 1284. Whatever calamity befell the doomed children of the town in that fateful year, it was a searing enough experience that, fully a century later, the town chronicle ominously noted, “It is 100 years since our children left.” What became of them (disease, starvation, landslide, emigration, dancing mania, and serial murder have all been put forward as possible solutions to the puzzle), the only clue to this greatest of medieval mysteries lies in the townspeople erecting a stained glass window to memorialize the calamity in about 1300. On it (the window was itself destroyed in 1660), there was a piper, dressed in bright, many-colored attire, leading children all dressed in white from the village. The legend of the pied piper of Hamelin was born. The fairy tale that grew out of this real-world tragedy is fascinating. In the legend, the flamboyant piper, by playing his magical flute, was hired to exterminate plague-carrying rats infesting the town by drowning them in the River Wesser. Once accomplished, the citizens of Hamelin greedily reneged on their debt. The piper retaliated in horrible fashion, using his seductive songs to drive the town’s children away forever. Thus the English idiom “paying the piper” was born, meaning that there will always be consequences for self-indulgent behavior. Now, for a Europe that has made managing rather than solving economic crises an art form, the time for paying the piper is fast approaching. The continent’s long-stagnating economy is now perched at the edge of a precipice. The pandemic health crisis has morphed over this past six months into a severe recession at best, exacerbating long-established European economic fault lines. Already hard-pressed Southern Europe is experiencing by far the worst of things, as the continent is rotting from within. Vastly underreported, Europe’s moribund economy is already entering a doom loop of deflation, with extremely limited weapons at its disposal to avoid the “Japanification” of the continent. With the European Central Bank (ECB) having already lowered interest rates to effectively zero, there simply is not much efficacy in trying to stimulate the continent’s economy with no real ammunition. If there is nothing much to be done on the monetary side, the fiscal weapons are underwhelming too. The vaunted €750 billion ($882 billion) EU-sponsored European Recovery Fund — far from bringing the much-hyped “Hamiltonian moment,” when the continent at last proclaimed to the world that it had gotten its fiscal act together — characteristically turned out to be much less than meets the eye. Not kicking in until mid-2021 and spread out over 27 countries with payments stretched until 2026, this is less an effort to decisively master the economic crisis than merely an attempt to yet again kick the can down the road, vainly hoping some good economic news magically turns up. Italy, the largest single recipient of grants from the fund, is a case in point. Already in recession before the pandemic struck, Rome endured a depression-era collapse in gross domestic product (GDP) of 12.8 percent in the second quarter of 2020. This is a country where fully 17 percent of businesses are predicted to be zombie companies — having negative worth — by mid-2021. The grants offered amount to just a drop in the bucket of what Italy needs to merely tread water. The continent’s long-stagnating economy is now perched at the edge of a precipice. Dr. John C. Hulsman Nor is Rome keen to avail itself of the loan option the European Recovery Fund puts forward as another avenue to help an increasingly desperate Southern Europe. For the loans, at the insistence of the frugal Northern Europeans, come with political strings attached that would make their recipients little more than economic colonies. In other words, the European Recovery Fund, far from signaling a new and glorious chapter in the story of ever-deepening continental integration, instead amounts to merely another half-measure signaling Europe’s relative decline. For anyone still clinging to fairy tales, here are the numbers. Deflation is already setting in. The eurozone inflation rate was negative 0.3 percent in September, after being negative 0.2 percent in August. In afflicted Southern Europe, the September numbers were even worse than the average, with a negative 2.3 percent in Greece, negative 0.9 percent in Italy, and negative 0.6 percent in Spain. Soon, Italy and Spain will be little more than ECB economic colonies, as the bank has already bought a gargantuan 25 percent of Italian debt, with that number expected to skyrocket to fully 50 percent by next year. In this time of no inflation and sclerotic growth, Southern European debt rates look set to explode to unmanageable levels. The OECD estimates — often notoriously overly favorable to Europe — make for the grimmest of reading. By the end of next year, the OECD’s worst-case scenario has Greece’s debt standing at 229 percent of its GDP, Italy’s at 192 percent, Portugal’s at 158 percent, France’s at 152 percent, and Spain’s at 150 percent. It is time to forget the relentless euro cheerleading. There is no getting around the fact that the piper will have to be paid. Dr. John C. Hulsman is the president and managing partner of John C. Hulsman Enterprises, a prominent global political risk consulting firm. He is also senior columnist for City AM, the newspaper of the City of London. He can be contacted via chartwellspeakers.com. Disclaimer: Views expressed by writers in this section are their own and do not necessarily reflect Arab News" point-of-view