Four countries pulled out of the contest this year because they reckoned that in these recessionary times it cost too much to send a contestant plus backing band. They may also have dreaded the thought of winning and having to raise the money for next year.

Germany, like much of the rest of Europe, is not only feeling poor with high unemployment, big state debts and the recession grinding stubbornly onward; the Europeans are also starting to believe that this grim state is likely to continue for the foreseeable future. The main reason for this is that Europe is starting to be rocked by the age-quake, the huge increased costs of pensions and healthcare that the retiring baby boomers will require.

Hopes that rising birth rates, particularly in Britain and France, could in the long run ease Europe's pension problem have been dashed by Germany's latest demographic figures. Published within the last few weeks, they show that after a recent upturn the German birth rate has plunged again to 1.38 children per woman of child-bearing age. A level of 2.1 is required for a stable population. This is Germany's lowest birth rate since 1946, the year after World War II. Last year, 190,000 more Germans died than were born.

Even if the recession ends quickly, the demands of the age-quake are going to grow, and the only way to contain them will be by shredding Europe's generous welfare state payments system, starting by increasing the retirement age, which means delaying the payment of pensions. Several European countries have started to raise the legal retirement age. Fiscally cautious Germans, still resentful at having to bail out the profligate Greeks, know that they will eventually have to work until 67. In Ireland and Britain the retirement age is slated to rise to 68 by 2028 and 2046, respectively, but these dates are almost certain to be advanced.

And having looked at the unhappy TV news reports of strikes and riots in Greece, including the fire at a bank that killed three people, other European governments are becoming nervous. They are doubtless aware that the political fallout of the new austerity could get ugly. Labor unions in Spain are preparing a wave of strikes. French labor unions have threatened the same, as President Nicolas Sarkozy braces for a new pension policy that would raise the retirement age above 60.

"The scope and the scale of the reforms that need to be implemented is much greater than in the 1980s," says Rainer Kambeck of the Rhine-Westphalia Institute for Economic Research, who warns of the prospect of widespread civil unrest, like the riots and violent demonstrations that hit Britain under the government of Margaret Thatcher.

It is not so much fear of the elderly, who tend not to riot, nor of those on medical disability allowance (who outnumber the formally unemployed in several EU countries), than of public sector employees who are facing layoffs, pay cuts and increased pension contributions. And Europe has no shortage of radical militants who are prepared to take advantage of the rising public unhappiness at the scale of the cuts now looming.

"The reforms will no doubt be politically detrimental to some incumbent governments, and a shift to the left or the far right is not inconceivable," said Nicolas Veron, senior fellow at Bruegel, a Brussels think tank.

In Britain, where the budget deficit is more than 11 percent of gross domestic product, the $9 billion in cuts announced last week was just a foretaste of the really savage reductions in public spending, probably 10 times larger, that are expected to be announced next month.

The political honeymoon for Britain's new coalition government of Conservatives and Liberal Democrats was battered at the weekend when one of the top Lib Dems, Chief Secretary of the Treasury David Laws, was forced to resign. This came after revelations that he had claimed some $60,000 in parliamentary expenses for apartment rental, although he was sharing the home of his male partner.

Altogether, if countries are to meet the EU target of getting their budget deficits less than 3 percent of GDP by 2013, they will have to cut some $500 billion from public spending. Germany media reports say their government is planning cuts in education, child support, healthcare and other benefits this year. Portugal has announced sharp cuts in social services; in Italy public sector salaries will be frozen until 2013.

In Spain, the pay of public employees is being cut by 5 percent. But even last week's $20 billion cuts, which only got through the Spanish Parliament by a single vote, couldn't stop Spain's credit rating from being downgraded by the Fitch agency Friday.

But even if the recession ends quickly and the public quietly accepts the scale of the cuts to come, there is still little prospect of Europe returning to the healthy levels of economic growth it enjoyed in the past. An aging population doesn't consume like young families with children. Old people don't innovate; they need more healthcare. They are reluctant to take risks and they run down their savings.

So there is little chance of a consumer-led recovery in Europe and even less hope for U.S. President Barack Obama's plan to double U.S. exports. The Europeans won't be doing much importing. Perhaps rather than trying to be a leader in the green economy, the real future for Europe (and Japan) is in learning how to run a gray economy that copes with and profits from the coming age-quake.

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