It has been an onslaught. Eurozone heads of state, top politicians, unelected kingpins, and bureaucratic honchos threatened everyone in sight with the demise of the euro, or promised to do “everything” or “whatever it takes” to save it even if it violated treaties or the very foundation of European democracy. In between the lines, bit by bit, the mammoth costs of continuing the endless bailouts or of breaking everything to pieces finally oozed to the surface.
Sunday it was Italian Prime Minister Mario Monti, whose country, after years of living beyond its means, is suffocating under a mountain of debt. He needs the European Central Bank to print a trainload of euros and massively buy up Italian sovereign bonds to force their yields down and keep Italy financially viable—which is precisely what the treaties that govern the ECB don’t allow it to do, though the ECB had done it before, despite all-out opposition from Germany, including the resignation of ECB Council Member and Bundesbank President Axel Weber and ECB Chief Economist Jürgen Stark. After buying €211 billion in sovereign bonds, the ECB stopped in March. And since then, all heck has re-broken loose.
So Monti went on attack. The Eurozone bailout chaos and Germany’s resistance to ECB printing operations have created tensions that show “the traits of a psychological dissolution of Europe,” he told the Spiegel, a threat designed for German consumption—the latest in a series of escalating threats issued by politicians of debt sinner countries. And like his predecessors, he took it a step further than anyone before him.
Further even than Alexis Tsipras, the firebrand leader of Greece’s left-wing SYRIZA party, who’d threatened during the chaotic election, “If Greece doesn’t get its next loan installment, the Eurozone will collapse the following day.” But now comes Monti—and it’s no longer just the demise of the 17-member Eurozone but the dissolution of Europe. Europe as a whole. If the ECB doesn’t print whatever it takes to bail out Italy, “the foundations of the project Europe are destroyed,” he said.
Then, indefatigable, the unelected technocrat went after democracy itself: “If governments let themselves be tied down completely by the decisions of their parliaments,” he said, and he was directly addressing Germany, “then the breakup of the Eurozone is more likely than a tighter integration”—the latter being Chancellor Angela Merkel’s brainchild and the focus of much of her efforts. Thus he’d lashed out at Germany’s democratic processes, including parliament’s involvement in some of the bailout decisions, limited as it is. Instead of allowing elected representatives of the people who will pay for the bailouts to have a say in the bailouts, Monti wants Merkel and her government to go around parliament and impose their decision on the citizenry.
“Attack on democracy,” is what Alexander Dobrindt, Secretary General of Merkel’s coalition partner CSU, called Monti’s words on Sunday. He lamented that “greed for German tax money is sprouting undemocratic flowers.” He didn’t mince words. “Mr. Monti apparently needs to be told that we Germans will not be ready to abolish our democracy just so that Italy’s debt can be financed.”
On Saturday already, Dobrindt had taken on ECB President Mario Draghi by accusing him of abusing the ECB for the benefit of his native Italy. “It’s striking that Draghi always becomes active and wants to buy sovereign bonds when Italy is once again in a tight spot,” he said. Even Draghi would have to adhere to the treaties governing the ECB. “He must decide where he stands: on the side of the stability union or on the side of the crisis countries that try to sneak their way to German money.”
Higher yields were a sign countries needed to reform, he said, and forcing yields down through bond purchases would only treat the symptoms, not the causes. Draghi’s plans, he said, reveal the life-long lie of European “centralists” in Brussels who want to guarantee “the same standard of living from Athens to Munich.” But this cannot be done, least of all through printing money for debt sinner countries. “That’s euro socialism,” he said.
Six of the 17 Eurozone countries are on life support, including Spain, whose banks got €100 billion, and whose central government will need much more. A bailout far larger than any prior bailout. And then there’s Italy..... But Who The Heck Is Going To Do All The Bailing Out?
And some food for thought: “Like Europe,” writes David Galland, “the economy of the US has been increasingly under the control of central planners at the expense of the free market.” With devastating consequences. Read.... Have You Overlooked Comprehending This Piece of the US Economic Puzzle?