“The Euro Will Blow Up Europe Instead Of Bringing It Together”
Monday, November 26, 2012 at 5:10PM “I cannot be disillusioned because I no longer have any illusions about Europe,” muttered Euro Group President Jean-Claude Juncker last week after the horse trading over Greece’s bailout had failed once again. But he wasn’t the only one who lost his illusions. “There are better alternatives to the bailout policies of Chancellor Merkel,” declares the man who’ll run against her in 2013; alternatives that “protect taxpayers and don’t only benefit the banks.”
After 40 years in the CDU, Merkel’s own party, that man, Stephan Werhahn left it earlier this year in protest over her bailout policies and joined the Free Voters (Freie Wähler). In 2008, they’d decided to get into the Bavarian parliament and won 11.2% of the seats. Out of nowhere. Now they’re going for the federal elections in 2013. And Werhahn—grandson of Konrad Adenauer, the legendary first Chancellor of the Federal Republic and one of the founders of the CDU—heads their list.
In the interview, he reviles the violations of the Maastricht Treaty, the founding document of the EU. One of its fundamental principles is that each country is responsible for its own debts and that no country can be held liable for the debts of other countries. The principle, he says, was first broken with Greece’s initial bailout in 2010. The preliminary bailout fund, the €480-billion EFSF, was “the next violation.” The third violation was the permanent bailout fund, the €700-billion ESM, which can be leveraged “so that the liabilities for Germany and German taxpayers will be greater still.”
The German Constitutional Court, in its review of the ESM, mandated two safeguards—a maximum liability for Germany of €190 billion and parliamentary approval before each disbursement. But that limit, he says, “is being leveraged by ECB President Mario Draghi” with his promise to buy “unlimited” amounts of debt as long as crisis countries submit to reform and austerity requirements. When the ECB buys debt, Germany is liable for 27% of any losses, blowing the lid off the Court-stipulated limit, and “without approval by Parliament.” These ECB policies as well as Germany’s Target-2 balances at the ECB of more than €700 billion “obscure the magnitude of the bailout financing.”
The government’s emphasis that aid is paid only if reform requirements are met might not work, he says, as it’s trying “to make something out of the southern European countries that they’re not.” Now there’s unrest in Europe: in the North, citizens don’t want to pay into a “bottomless barrel”; in the South, citizens, who’re suffering under austerity pressures, say that the only ones getting bailed out are “rich tax dodgers and investors who bought that government debt.”
What about the warning by financial experts that stopping the bailouts would produce enormous turbulence? “Exaggerated and pure banking lobbyism,” Werhahn retorts.
Granted, many private and public investors would suffer losses. And the fact that there’s no procedure for the bankruptcy of a country would be a problem. But Greece and possibly Spain are “broke.” They can’t restore their competitiveness while tied to the euro. Not even the entire second bailout package will be enough, he says; and ever more money will have to flow “to keep these countries in the Eurozone.”
Instead, the EU should carry out an orderly bankruptcy of these countries. Then it can step in with “a sort of a Marshall plan” to fund a fresh start. Devaluation will help them raise their exports and reduce imports. After they get their house in order, they can rejoin the Eurozone. But if they can’t become competitive, they won’t be “suitable for the monetary union.” Otherwise, Werhahn says, “The euro will blow up Europe, instead of bringing it together.”
Wait.... Many European politicians nurture the idea that the euro is more than a currency, that it’s an “icon of unity and peace.” Indeed, but the Free Voters are against “over-elevating” the euro to a “romantic symbol.” He warned: “We have a lot to lose if the euro becomes soft.”
And he wants more democracy. The Free Voters are proponents of referendums at the federal level on important issues—however unlikely that may be in Germany. For a referendum to work there needs to be a “fair discussion,” he says, and the questions can’t be manipulative. It will force the political world to clarify alternatives and encourage the population to get informed. He lamented the current resignation among citizens who are seeing complex problems and large amounts, but are not even being asked about them—because in Europe, “crucial democratic legitimacy is lacking.”
After Moody’s downgraded France, the next major sovereign will suffer the same fate. The UK has a phenomenal 436% of GDP in foreign debt, which is not considered a problem because the country holds “high-value assets.” Alas, they include €489 billion in Greek, Irish, Portuguese, Italian, Spanish, and French debt. Read.... Who’s the Next Downgrade Domino?…The UK?
Reader Comments (7)
Many years ago....
# Berlusconi's FinMin asked the EU for a "holiday from the Euro" ... Answer : No
# Spain asked for a "2 Euro" banknote ( b/c inflation was rife ) ... Answer : No
# German Book: "Good money, bad politics" ( ca. 1992 ) .. ex-BB-Boss Pohl says "The Euro comedy will end by renaming everything back to Euro-DM, Euro-France, Euro-Lira...." etc.
It was obvious from the outset that the Euro was a political project and had no chance of surviving without "forcing" a United States of Europe ; and even then would fail thanks to EU bureaucrats that think Central Planning is the solution.
I stated 12 years ago that the birth of the Euro will cause trouble WW alone because the USD will not give up it's "status" without a fight , and ..... DSK arrested on dubious charges shortly after proclaiming ... "The Euro could become the next Reserve Currency".
Go figure !
- electoral system;
- how the bail out opposition can get itself organised;
- can get a proper leader;
- where the bailout opposition is in the political spectrum (especially in case of coalitions, but also whose voters they will be stealing);
- cuts situation (how many cuts for locals are made and will have to be made to pay for the bail outs) and unemploymentfigures.
For Germany this party will not do the trick. Their ideas are ok for that, but they look even worse and less charismatic than Paul, simply crap presentation (no vote pulling capacity at all). Not really well organised. Against the most rightwing party in parliament the CSU in a very conservative (not easy to change alliances) state.
It won't happen unless they come up with somebody that really attracks voters (like Wilders in Holland, only less one-linerish, Germans donot really like that). Plus added problems no organisation, German system doesnot favour small parties and start ups and people have not really faced real cuts (as the German economy is ok as the only one in Europe).
Things will have gone Euro-rescue wrong first in other donor countries especially as cuts are there closer to the voter and have already hit in much harder. So Holland or France. Both in a different way. Holland as it doesnot want to, and France because it simply cannot afford into pay a huge bail out (other than in guarantees). From the donor countries these 2 are big enough to bring the rescue down. The other donors are much smaller than Holland (and less original corish) and likely would need to start a chainreaction, a real possibility if that would happen btw.
Not to mention the problems on the receiverside.
Best chance for Gemany is when the FDP get their act together and goes for a pro-business (real business, not banking), reorganise EU, social liberal, no increrase of entitlements policy. There is a huge market for that. However they are in a complete mess and their leader is completely rubbish (and so was the previous one). But with a new charismatic leader and these new policies they could get bigger than they ever were and become one of the big German parties. This would likely give Germany a rightwing government (by getting hold of the protest vote mainly plus those who want to make a move from the CDU mainly by people who have de facto left the church) and force Merkel's party to move to the right (and be more Euro-sceptic) as well. Something we have seen in Holland the rise of Wilders made the VVD much more anti immigration and Euro sceptic (simply in order not to lose voters) and as we see in the UK with the UKIP, conservatives move over in order not to lose votes.
Problem with the EU is now that it either has to cut the non working non sense (and make it work) or make it work by increasing powers. This is a daily affairs government, but without daily management (more monthly or annually). For the latter they donot have a platform in the populations and are very unlikley to get one (who wants to join a bunch of mismanaging megalomaniacs with a bad press (on headline level) roughly every day of the week and for the coming years. May be politicians can push it through in some countries but never in all.
And cutting the failed parts of the European expiriment is opposed by the burocrats and will go very slowly anyway. Difficult to do if you first said it was better than the gospel well after 3 times increasing the powers transferred to Brussels anyway. But it looks like the latter is at the end far more likely. The process has started verbally a few years ago and was given a push by Mr Cameron around the budget discussions. The EU will come for the choice accept the degree of EU the people support or have them ultimately leave the joint.
As CSU Minister Seehofer once reported ( can be found here: http://www.youtube.com/watch?v=d5dC7hI0t8E ) :
..." those that make the decisions are NOT the elected, and those that ARE elected have no power to make decisions" ....
Politicians can get away with a lot of things, because the voter will have forgotten the issue at the time he has to vote, the alternative is even more crap, etc. However usually not with top of the voter agenda; long term, permanently in the media issues (like the Euro crisis). Some time they do, but most of the time they donot as politicians want to be reelected, there might be other new parties on the block etc. Here Merkel might push it through in Germany, but i doubt if 1 extra term will be sufficient for that anyway. Would be longer term kicking the can more likely and only in Germany which is probably the most unlikley troublemaker (plugpuller).
I doubt if for 10 years or so in 5/6 countries (the essential ones for paying or large receivers) it will go well. Completely unlikely. It will bump into some kind of opposition. Either directly by voting out the Merkels or indirectly new paries coming up that force the traditional ones to change policies or get voted out. Or via necessary referenda. Unlikley if the bail out set up will survive any referenda in one of the essential 5/6 countries.
Here the voter will have somehow the last word. But as said may be not via Germany. But that is not necessary to have the plug pulled out (italians, Spanish, Dutch, French likely Belgians can do that as well and even the other ones of mainly the donors might cause a chainreaction creating the same result.
Progressives really don't like personal freedom much because it is a stumbling block to controlling you. In their minds, freedom is a very narrow corridor of rights they will grudgingly bestow, as long as you behave yourself. You may enjoy free speech, as long as you say only things they want to hear. Anything else is hate speech and you will be incarcerated. Economic freedom is also closely monitored to make sure you are exhibiting the proper behaviors with regard to energy usage, the foods you eat and so on. If you eat red meat, drive a low mileage car and smoke cigarettes, you are simultaneously a lovely form of tax revenue and public enemy number one. All those hours you spent at work, coming in early and staying late, will pay for the ample retirement packages of the very public union employees who tax you, regulate you and curse you as a greedy pig. If you want an explanation that would make a circus contortionist proud, just ask a Chinese diplomat what personal freedom is. That is our future.
Comment from:
Some in Britain say EU is bringing a new 'Marxist revolution'
By Henry Chu, Los Angeles Times, November 25, 2012, 5:24 p.m.
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"... today's New Left carries out a program of social re-engineering using lies, myths, and "critical theory." Critical theory, developed by the Frankfurt School of neo-Marxists, is the deconstructive program that asserts no positive remedy for mankind except to destroy capitalism, whose assumption of private property is the lynchpin that undergirds the individual freedoms espoused by the Enlightenment."
The Triumph of the State
November 25, 2012, By Kyle Becker
"The trajectory of Europe is the vision of America's future: the triumph of the state, and the return of the pre-modern, arbitrary rule of self-appointed elites, shameless fawned upon by sycophantic intellectuals. And beneath their petty heights of arrogance and condescension shuffle the great, brooding underclass of humanity -- perpetually in need and perpetually restrained from improving its own lot."
Read more: http://www.americanthinker.com/2012/11/the_triumph_of_the_state.html#ixzz2DQKXAkoQ