Is mass immigration really Europe's growth elixir?

In the middle of the political storm unleashed by Germany's unbridled immigration policies, the European Central Bank (ECB.) introduced two weeks ago an economic rationale to support an open quest of German businesses for waves of immigrant manpower.

One of the ECB's vice presidents, seconded by the president of the German central bank, emphatically argued that the euro area needed an increasing amount of labor input lest it be condemned to inescapable economic stagnation or worse.

Technically, the argument of the European central bankers is unassailable. In the five years to 2014, the euro area's average annual growth of the active civilian labor force was a dismal 0.3 percent – a sharp and unmistakable slowdown from an already weak 0.7 percent average annual growth over the previous twenty years.

The danger is clear. Such a decline in labor supply cannot be offset by capital intensive (i.e. labor saving) production processes to keep the economy growing and generating enough wealth to ensure sound public finances and the maintenance of European welfare states.

And neither can that create an economy offering full employment and an acceptable price stability.

Here again, the euro area record is quite worrying. Between 2010 and 2014, the area's growth potential (a variable approximated by the sum of growth of labor supply and productivity) was estimated at an average annual rate of 0.7 percent. That is also a huge drop from a 1.9 percent average annual growth during the previous twenty years.

The result is this: In the first two quarters of this year, the euro area was growing at an annual rate of 1 percent, and the unemployment rate in July was stuck at 10.9 percent – very little progress from 11.5 percent observed in the same month of last year.

Think again

Now, here is something for the Germans, the EU Commission (ominously accused by French politicians of all stripes of dancing to the German tune) and the ECB to think about.

That 10.9 percent euro area unemployment rate is telling us that there are currently 15.532 million people out of work in the 19 countries of the monetary union. Things get much worse for the 28 EU member states: 23.067 million men and women were unable to find a job in July.

Perhaps the most heart-breaking statistic is that 3.093 million young people (below the age of 25) in the euro area were out of work, with that number going up to 4.634 million in the EU as a whole. The situation is particularly sad and serious in countries of very high youth unemployment such as Greece (51.8 percent), Spain (48.6 percent) and Italy (40.5 percent).

The question is: Why aren't the German businesses tapping into this huge reservoir of readily available and educated labor force before pushing the government to open the borders and to speed up the processing of migrants from non-EU countries, arguing that they urgently need 550,000 workers to fill existing job vacancies?

Is it less heart-breaking to see young Portuguese (whose unemployment rate is 33.3 percent) go to Angola and Mozambique in a desperate search of work and future? Or the young Spaniards rioting in the streets and accusing the government of pushing them to emigrate? And how about that cruel Bulgarian joke (where youth unemployment is 23 percent) that their most traveled road is the highway to Sofia's airport?

A Faustian bargain

Please don't think for a moment that I am insensitive to the plight of migrants from war-ravaged regions such as Afghanistan, Iraq, Syria and North and Central Africa.

I am simply making a point that there is something deeply troubling about Germany's glossing over the poverty and destitution of 23.067 million fellow Europeans on the grounds that borders must be opened up because of the lack of readily available labor force. That sounds like another cruel joke.

Read More Four reasons why Europe's migrant crisis matters

More seriously, such a policy is also driving a carriage and a horse through the sacrosanct principle of "preference communautaire" (giving preference to an EU offer). And that is done by a country – Germany – insisting, whenever convenient, on an unfailing respect of EU rules and trading customs, a.k.a. "acquis communautaire," the whole body of EU laws, treaty provisions and simple comity.

In the case of Germany, this also means a short shrift to the fact that its trade surplus with European partners is currently running at a cool annual rate of 144 billion euros ($161 billion). That is nearly two-thirds of Germany's net income from its total foreign trade.

The merciless crushing of Greece was also a sight to behold. Once Berlin got Athens to submit to its devastating diktat, in plain view of the whole world, German leaders had temerity to say that they did not want to throw Greece out of the euro area.

As a self-appointed boss of all of Europe, Germany bears a significant responsibility for the intractable refugee crisis. Here is an example. The French launched the Mediterranean Union (the Barcelona Process) on July 13, 2008 – a grouping of 43 states, enthusiastically supported by Israel and Egypt, and holding a rare promise of trade, investments and political stability in North Africa and the Middle East. But the whole thing was shot down by Germany. The country's Chancellor Merkel is quoted as saying that the project "risked to split and threaten the core of the EU"

The French thought otherwise. In their view, Germany did not want France to lead such a large group of nations. Berlin preferred to push its "Eastern Partnership," where it could exercise an undisputed influence in its traditional backyard. The fact that this set the EU on a collision course with Russia (in Ukraine, Moldova, Georgia and the Balkans) is another story.

But the French have only themselves to blame. This dangerously unbalanced political situation in Europe is a result of a disastrous French statecraft since the spring of 2007. That has now set the stage for an unholy alliance of the French extreme right (polling at 30 percent and poised to win big in the forthcoming regional elections) and extreme left, both of which are virulently anti-German. These new forces have now spread an intense Germanophobia across the entire French political spectrum unseen in the postwar period.

Investment thoughts

The EU is unraveling. The uncontrollable refugee crisis is just the accelerator of that long-brewing process. It is frightening to hear the warning of the Polish president of the EU Council that millions are on the way of an unstoppable refugee inflow. You will see more walls, barbed wires and armed forces to try and stem the tide.

Read More Migrants could help solve Europe's aging problem

This is a very sad and disruptive development. It is seriously aggravating an acutely economically and politically unstable situation in the EU and the Balkans. Migrants will be more of a burden than a net contribution to the EU economic growth. Even making a heroic assumption that the unfolding events can be managed, it will take years for these migrants to become productive members of the European society.

If you still believe in the euro, only one thing is certain: The ECB will do its duty to keep the currency afloat as long as its mandate to do so remains in force. But how long they will have that mandate is anybody's guess.

France is to blame for all this. Its unforgivable economic and political mismanagement over the last ten years has left the EU totally rudderless. Germany, however, should hold off toasting with the "sekt" (the German sparkling wine). There is nothing to celebrate. Germans may just inherit an empty shell.

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