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Au Revoir to European Democracy: “A Calm Judgement of Business Necessity”


Dave Emory’s entire life­time of work is avail­able on a flash drive that can be obtained here. (The flash drive includes the anti-fascist books avail­able on this site.)

Joseph Goebbels, Hitler’s pro­pa­ganda chief, once said: ‘In 50 years’ time nobody will think of nation states.’

COMMENT: Viewing events in Europe brings to mind the closing words of James Stewart Martin’s All Honorable Men. Quietly, the Eurozone debt crisis has brought about an orderly transition to the “calm judgement of business necessity” with which Martin closed his book.

As Greece and Italy have seen governments appointed by the German dominated “technocracy” with no democratic input whatsoever from the population of those countries, we can begin to see the outlines of the gambit of “fascism instead of financial collapse.”

The alternative to a global financial meltdown–we are told–is to hand over the controls to “technocrats” to implement the “business necessity” brought about by the deliberately irresponsible, destructive policies of the large financial institutions whose profit-making has engendered the crisis.

In this regard, it is useful to underscore a couple of articles researched by R. Wilson from the Daily Telegraph [UK].

“German Memo Shows Secret Slide Towards a Super State” by Bruno Waterfield; Daily Telegraph; 11/17/2011.

EXCERPT: The six-page memo, by the German foreign office, argues that Europe’s economic powerhouses should be able to intervene in how beleaguered eurozone countries are run.

The confidential blueprint sets out Germany’s plan to tackle the eurozone debt crisis by creating a “stability union” that will be “immediately followed by moves “on the way towards a political union”.

It will prompt fears that Germany’s euro crisis plans could result in a European super-state with spending and tax plans set in Brussels.

The proposals urge that the European Stability Mechanism (ESM), a eurozone bailout fund that will be established by the end of next year, should be transformed into a version of the International Monetary Fund for the EU.

The European Monetary Fund (EMF) would be able to take full fiscal control of a failing country, including taking countries into receivership.

The leaked document, The Future of the EU: Required Integration Policy Improvements for the Creation of a Stability Union, comes as David Cameron meets Angela Merkel, the German chancellor, in Berlin today to talk about treaty changes and the eurozone crisis.

The German plan begins with a proposal to create “automatic sanctions” that could be imposed on euro members spending beyond targets set by the European Commission. Germany is demanding that if euro rules are “consistently violated”, it should be able to demand action from the European Court of Justice.

The six-page memo, by the German foreign office, argues that Europe’s economic powerhouses should be able to intervene in how beleaguered eurozone countries are run.

The confidential blueprint sets out Germany’s plan to tackle the eurozone debt crisis by creating a “stability union” that will be “immediately followed by moves “on the way towards a political union”.

It will prompt fears that Germany’s euro crisis plans could result in a European super-state with spending and tax plans set in Brussels. . . .

COMMENT: Chancellor has turned her thumb down on a proposed British referendum on the EU.

It was a proposed Greek referendum that led to the installation–without any democratic input from the Greek people–of a provisional government including doctrinaire fascists in prominent positions.

“Germany’s Secret Plans to Derail a British Referendum on the EU” by Bruno Waterfield; The Telegraph; 11/18/2011.

EXCERPT: Angela Merkel, the German chancellor, is today expected to tell David Cameron that Britain does not need a referendum on EU treaty changes, despite demands from senior Conservatives for more powers to be repatriated to Britain.

The leaked memo, written by the German foreign office, discloses radical plans for an intrusive new European body that will be able to take over the economies of beleaguered eurozone countries.

It discloses that the EU’s largest economy is also preparing for other European countries, which are too large to be bailed out, to default on their debts — effectively going bankrupt. It will prompt fears that German plans to deal with the eurozone crisis involve an erosion of national sovereignty that could pave the way for a European “super state” with its own tax and spending plans set in Brussels.

Britain would be relegated to a new outer group of EU members who are not in the single currency. Mr Cameron will today travel to Brussels and Berlin for tense negotiations with Mrs Merkel amid growing disagreement between the leaders over how to deal with the eurozone.

The Prime Minister is increasingly exasperated that Germany refuses to provide more financial help for Italy and other struggling countries amid concerns that the crisis is having a “chilling effect” on the British economy. Mrs Merkel yesterday said she expected Mr Cameron to “examine a stronger involvement with other countries” once the eurozone crisis had been resolved.  . . .

COMMENT: “Terrafractyl” provided us with another article indicating that the transformation of the PIIGS countries (Portugal, Italy, Ireland, Greece, Spain) into German vassal states is accelerating.

“Merkel Tightens Grip on Eurozone: Why did Irish Budget Plans End Up in Berlin?” by Rob  Davies and Hugo Duncan; Mail Online; 11/18/2011.

EXCERPT: Fears that Germany’s grip on the eurozone is tightening increased last night after it emerged that details of Ireland’s budget plans were leaked to German politicians.

A document circulated in the German Bundestag revealed Dublin’s proposals to save the debt-ridden country £3.25billion.

The details were for next year’s budget, which have not yet been approved by the Irish Taoiseach Enda Kenny.

He was forced into an embarrassing denial that his plans were being inspected in Berlin.

Any suggestion that Ireland is running its austerity cuts past Europe’s economic powerhouse for approval will fuel concern that Germany is using its wealth as a lever to amass power over the 17-nation single currency bloc.


25 comments for “Au Revoir to European Democracy: “A Calm Judgement of Business Necessity””

  1. That’s a nice country you got there. It would be a shame if anything happened to it:

    Germany last night declared that Britain would be forced to scrap the pound and join the euro – as David Cameron returned home empty-handed from crisis talks in Berlin.

    In a highly-provocative intervention, German finance minister Wolfgang Schauble suggested the UK’s struggling economy meant the pound was doomed, and urged the Prime Minister to back Europe’s ailing single currency.

    Mr Schauble said the euro would emerge stronger from the current crisis – leaving Britain on the sidelines unless it signed up. He said Britain would be forced to join ‘faster than some people on the British island think’ – despite a pledge by Mr Cameron never to do so.

    Leading German magazine Der Spiegel ran a prominent feature describing Britain as the ‘dis- eased empire’.

    And Rainer Brüderle, head of Mrs Merkel’s coalition partners, said: ‘Britain can’t be freeloaders in the eurozone.’

    I’m actually kind of a surprised that the Cameron government isn’t more gung ho about joining the eurozone. I mean, at this point Berlin is basically offering to play Dr. Austerity for the whole EU. Just imagine: Governments around the continent get to grind to their social spending down to the bone, but it’s totally not their fault. Germany made them do it. And the best part is that this awesome service is totally free.

    Posted by Pterrafractyl | November 24, 2011, 7:51 pm
  2. http://uk.reuters.com/article/2011/11/18/uk-ireland-germany-concern-idUKTRE7AH1B920111118

    “The media and opposition reacted furiously at the fact that the details of the December budget were presented to German lawmakers before their Irish counterparts, heightening fears that its EU-IMF bailout has undermined Irish sovereignty.

    “Germany is our new master,” ran a banner front-page headline in the Irish Daily Mirror. Opposition leaders in parliament described the leaks as “incredible” and “unprecedented” and demanded the government explain.

    New German laws give its parliament the right to be fully informed about bailout countries’ progress before new trenches of funds are paid out and Ireland’s main opposition party led cries Germany was now calling the shots in Europe.”

    Posted by Leif | November 25, 2011, 5:18 am
  3. Heh, now I see why our oligarchs hate unions so much: they hate the competition. That’s one thing about oligarchies…you only get one and it probably hates you:

    Euro Zone May Free Banks From Taking Bond Losses
    Published: Friday, 25 Nov 2011 | 1:34 PM ET
    By: Reuters

    Euro zone states may ditch plans to impose losses on private bondholders should countries need to restructure their debt under a new bailout fund due to launch in mid-2013, four EU officials told Reuters on Friday.

    Discussions are taking place against a backdrop of flagging market confidence in the region’s debt and as part of wider negotiations over introducing stricter fiscal rules to the EU treaty.

    Euro zone powerhouse Germany is insisting on tighter budgets and private sector involvement (PSI) in bailouts as a precondition for deeper economic integration among euro zone countries.

    But clauses relating to PSI in the statutes of the European Stability Mechanism (ESM) — the permanent facility scheduled to start operating from July 2013 — could be withdrawn, with the majority of euro zone states now opposed to them.

    The concern is that forcing the private sector bondholders to take losses if a country restructures its debt is undermining confidence in euro zone sovereign bonds. If those stipulations are removed, most countries in the euro zone argue, market sentiment might improve.

    “France, Italy, Spain and all the peripherals” are in favor of removing the clauses, one EU official told Reuters. “Against it are Germany, Finland and the Netherlands.” Austria is also opposed, another source said.

    German officials dismiss any suggestion of a ‘grand bargain’ being put together, but officials in other euro zone capitals, including Brussels, say such a deal is taking shape and suggest Berlin will move when it has the commitments it is seeking, although it’s unclear when that will be.

    German Chancellor Angela Merkel said after meeting French President Nicolas Sarkozy in Strasbourg on Thursday that there was no quid pro quo being set up.

    “This is not about give and take,” she said.

    Yeah, why play “give and take” when “take and take” works to well. It’s interesting how that strategy never seems like an option for non-super-elites:

    November 24, 2011 2:27 PM
    Global health fund halts new programs


    GENEVA – The world’s biggest financier in the fight against three killer diseases says it has run out of money to pay for new grant programs for the next two years — a situation likely to hit poor AIDS patients around the world.

    An official with the Global Fund to Fight AIDS, Tuberculosis and Malaria said Thursday that they have been forced to cease giving new grants until 2014 because of global economic woes brought on by debt crises in the United States and Europe.

    An independent panel recommended in September that the fund must adopt tougher financial safeguards after it weathered a storm of criticism and doubts among some of its biggest donors.

    The fund created the panel — chaired by former U.S. Health and Human Services Secretary Michael Leavitt and ex Botswana President Festus Mogae — in March to address concern among donors after Associated Press articles in January about the loss of tens of millions of dollars in grant money because of mismanagement and alleged fraud.

    The Geneva-based fund was set up in 2002 as a new way to coordinate world efforts against the diseases and to speed up emergency funds from wealthy nations and donors to the places hardest hit.

    Since its creation, the fund, which is strictly a financing tool, has disbursed some $15 billion for programs — $2.8 billion this year alone, including to pay for treatment for around half the developing world’s AIDS sufferers. With donations harder to come by, the fund says it can only afford to keep existing AIDS programs going, but not expand its services or add new patients.

    Among those decisions were that hundreds of millions of dollars in grants planned for China, Brazil, Mexico and Russia will now be used for other purposes, fund officials said.

    “It is deeply worrisome that inadvertently the millions of people fighting with deadly diseases are in danger of paying the price for the global financial crisis,” the fund’s executive director, Dr. Michel Kazatchkine, said in a statement.

    The fund released 12 reports on its website earlier this month that turned up an additional $20 million of mismanagement, alleged fraud and misspending. Earlier probes had detected about $53 million in losses, according to fund documents.

    Aha, here’s why global health won’t get a bailout. Out of the $2.8 billion in this years expenditures, only $73 million was mismanaged. You got to think BIG if want to get bailed out these days.

    Posted by Pterrafractyl | November 26, 2011, 6:11 pm
  4. http://www.huffingtonpost.com/2011/11/24/dexia-liquidity-facilities_n_1111764.html

    Dexia, Franco-Belgian Bank, Using Emergency Liquidity Facilities To Tackle ‘Very Dramatic’ Problem

    First Posted: 11/24/11 08:07 AM ET

    BRUSSELS (Ben Deighton) – Franco-Belgian bank Dexia (DEXI.BR) is accessing emergency liquidity facilities in Belgium, France, Spain and Italy, a banking source said on Thursday, as analysts described its liquidity situation as “very dramatic.”
    The source said the bank was making use of the Emergency Liquidity Assistance (ELA) facility of the Belgian central bank as well as “national central banks in France, in Spain, in Italy,” where Dexia has units.

    One analyst said the fact Dexia was tapping national central banks’ liquidity via the European Central Bank network showed how bad the situation had become for the lender.

    “The emergency window of the ECB … is very expensive, so it shows that the liquidity situation is very dramatic,” the analyst said, speaking on condition of anonymity.

    “At some point you run out of unencumbered assets to post at the ECB, and then the only way to fund yourself is via the ELA, which is clearly not a good sign,” the analyst said.

    Dexia and the central banks of France and Belgium both declined to comment.

    The source added that Dexia would try to raise money on markets again after the finalization of a 90 billion euro ($120 billion) guarantee scheme agreed in October by France, Belgium and Luxembourg.

    Belgian Finance Minister Didier Reynders said Wednesday that he hoped to reach an agreement with the European Commission about the restructuring plan for Dexia (DEXI.BR) in the coming days.

    Posted by R. Wilson | November 26, 2011, 8:24 pm
  5. Wow, it looks like they really are going to push the whole “the bond vigilantes made us do it” approach. What a grand new social contract upon which to base your new order: “Do not anger the market gods”. I’m starting to think the Seasteading project is obsolete.

    “We are in an economic war with a number of powerful speculators who have decided that the end of the euro is in their interest”

    Germany, France press coercive euro zone debt rules
    By Stephen Brown and Jan Strupczewski

    BERLIN/BRUSSELS | Mon Nov 28, 2011 9:23am EST

    (Reuters) – Germany and France stepped up a drive on Monday for coercive powers to reject national budgets in the euro zone that breach EU rules, as a market rout of European debt eased temporarily on hopes of outside help for Italy and Spain.

    The OECD rich nations’ economic think-tank said the European Central Bank should cut interest rates and step up purchases of government bonds to restore confidence in the euro area, which now posed the main risk to the world economy.

    In Brussels, finance ministers of the 17-nation currency area meeting on Tuesday are due to approve detailed arrangements for scaling up the European Financial Stability Facility rescue fund to help prevent contagion in bond markets, and release a vital aid lifeline for Greece.

    Berlin and Paris aim to outline proposals for a fiscal union before a European Union summit on December 9 increasingly seen by investors as possibly the last chance to avert a breakdown of the single currency area

    “We are working intensively for the creation of a Stability Union,” the German Finance Ministry said in a statement. “That is what we want to secure through treaty changes, in which we propose that the budgets of member states must observe debt limits.”

    It dismissed a report by the newspaper Die Welt that Germany and the five other euro zone states with top-notch AAA credit ratings could issue joint bonds for themselves and partners.

    Moody’s Investors Service warned that the rapid escalation of the euro zone sovereign debt and banking crisis threatened all European government bond ratings.


    The leaders of two smaller euro zone countries, Finland and Luxembourg, voiced unease about the Franco-German plans because they appeared to bypass the European Commission, which is seen as a guarantor of equal treatment for all member states.

    “We don’t find this type of system good and I am not too sure if it will get wider support. The disadvantage of this proposal is that it would bypass the EU, the Commission would have a very small role,” Finnish Prime Minister Jyrki Katainen told reporters.

    Luxembourg Prime Minister Jean-Claude Juncker, who chairs euro zone finance ministers, also warned against looking for instruments outside the EU treaty.

    In France, Agriculture Minister Bruno Le Maire said euro zone countries would have to give up some budget sovereignty to save the euro from hostile “speculators.”

    “We won’t be able to save the euro if we don’t accept that national budgets will have to be a bit more controlled than in the past,” Le Maire told Europe 1 radio.

    “We are in an economic war with a number of powerful speculators who have decided that the end of the euro is in their interest,” he said.

    Handing over fiscal sovereignty to the executive European Commission is politically sensitive in France, which has a strong Gaullist, nationalist tradition.

    President Nicolas Sarkozy’s office sought to quash a weekend newspaper report that Berlin and Paris were planning to confer “supranational powers” on Brussels, suggesting such intrusion would only apply to countries such as Greece that were under EU/IMF bailout programs.

    Asked whether the Commission would be granted intrusive powers over national budgets in the euro zone, Le Maire said: “Why not? The French people have to realize what is at stake — the preservation of our common currency and our sovereignty.”

    Posted by Pterrafractyl | November 28, 2011, 7:54 am
  6. The official position on eurozone “reform” appears to now be “Normally these kinds of treaty changes take years to work out, but the markets demand a clear signal right now. Given this reality, the only solution now is to hastily push through EU treaty changes with profound implications that no one has time to discuss. Keep in mind that they will have have to please the market’s desires at that moment. Also keep in mind that the market has been recently enamored with the writings of Johnathan Swift so its desires may seem austere. We appreciate your continued acquiescence.”

    That’s pretty much it:

    Merkel Seeks Swift Action on What May Be Long Job to Save the Euro

    BERLIN — Chancellor Angela Merkel on Friday called for swift action to amend European treaties to address the underlying causes of the debt crisis that has shaken Europe and jeopardized the future of the common currency.

    While Mrs. Merkel called for quick changes, “if possible by the end of the year,” historically there has been nothing speedy about the remedy she proposed: fixing the “mistakes of construction” in the euro zone by altering the treaties that govern the European Union. It took years to negotiate and ratify the last major change, the Lisbon Treaty, after the failure of the previous effort to write a European constitution.

    But Europe’s leaders are evidently hoping to use the shadow of impending crisis to speed the process. Mrs. Merkel’s call for a new treaty tracked with a speech made Thursday by President Nicolas Sarkozy of France, with whom Mrs. Merkel has been negotiating. Some experts say there are more expeditious ways to effect treaty changes than the traditional path followed by the Lisbon Treaty.

    Mrs. Merkel’s assessment of what was needed appeared to be well received by European financial markets, which had been strengthening this week anyway, partly on hopes that European leaders would address the crisis. The Stoxx 600 index, a broad barometer, rose 1.2 percent for the day and 9 percent for the week, its biggest gain in three years, Bloomberg News reported. The euro was trading at $1.348, up from $1.346 on Thursday.

    Some financial experts have also speculated that Mrs. Merkel and Mr. Sarkozy are trying to create the impression of irresistible momentum toward structural change in Europe as political cover for the central bank. If the public and the bank believe that steps are being taken to rein in irresponsible governments, the experts say, then the bank’s German-influenced leadership is more likely to act decisively.

    The president of Germany’s powerful central bank, Jens Weidmann, said Friday that the long-term solution to the euro crisis was the responsibility of governments, rather than of the central banks. Countries must be willing to cede some control over their spending policies, he said, for example by agreeing to automatic tax increases if their budget deficits rise above limits agreed to by treaty.

    If political leaders announce a credible plan this coming week, he said, “calm could quickly return to markets.”

    I’m not exactly sure why the markets would be enthusiastic about treaty changes that mandate tax hikes when budget deficits exceed limits since that will almost always happen during recessions. Unless, of course, the markets desire to see a eurozone that is rooted not in internal trade amongst member nations, but instead upon driving the weaker members into permanent austerity in order to drag down the value of the euro low enough so that Germany’s exports can compete with China globally (not forever, mind you, that would be cruel. Just a lost generation or two). That seems possible. Or maybe the markets are just planning on a different type of export policy. So many options

    Posted by Pterrafractyl | December 3, 2011, 5:07 pm
  7. Since Merkozy is already hard at work overhauling the eurozone treaty and formally turning it into a constitutionally enchrined debtor’s prison, it’s a great time to update the name “eurozone”. “Eurozone” sounds too cold and technocratic. That won’t do as a distraction from the cold technocracy its about to fall into. How about “The zone of eternal forgiveness”:

    Felix Salmon
    A slice of lime in the soda

    The euro zone’s terrible mistake
    Dec 5, 2011 23:36 EST

    The FT is reporting today that the new fiscal rules for the EU “include a commitment not to force private sector bondholders to take losses on any future eurozone bail-outs”. If this principle really does get enshrined into some new treaty, it will be one of the most fiscally insane derelictions of statesmanship the world has seen — but it certainly helps explain the short-term rally that we saw today in Italian government debt.

    Right now, the commitment is still vague:

    Ms Merkel agreed that private sector bondholders would not be asked to bear some of the losses in any future sovereign debt restructuring, as she had insisted this year in the case of Greece’s second bail-out. However, future eurozone bonds will still include collective action clauses providing for potential voluntary rescheduling of private debt.

    Ms Merkel said it was imperative to show that Europe was a “safe place to invest”.

    You can safely ignore the bit about collective action clauses. They’re part of the sovereign-debt architecture now, and taking them out would be far more trouble than it was worth: they have to stay in, no matter what. The important thing is that they won’t be used — because if no one’s going to ask bondholders to bear any losses, then they won’t have any proposals to agree to.

    The impetus for this completely insane policy seems to have come from the ECB, which genuinely seems to believe that bailing in private-sector banks, in the Greece restructuring, was the “terrible mistake” which caused the current euro crisis. Talk about confusing cause and effect: it was Greece’s fiscal disaster which caused the restructuring and the necessary bail-in.

    To understand just how stupid this is, all you need to do is go back and read Michael Lewis’s Ireland article. The fateful decision in Ireland was to take the insolvent banks and give them a blanket bailout, with the banks’ creditors all getting 100 cents on the euro. That only served to put a positively evil debt burden onto the Irish people, forcing a massive austerity program and causing untold billions of euros in foregone growth, while bailing out lenders who deserved no such thing.

    Are we really going to repeat — on a much larger scale — the very same mistake that Ireland made? Does no one in Europe realize that this is the single worst thing they can do?


    So will they do the “single worst thing they can do”? Of course! The “market” will won’t give them a choice (which is rather unforgiving, all things considered).

    Posted by Pterrafractyl | December 6, 2011, 8:37 am
  8. One of the more relevant aspects of the “Shining Low-Debt City on a Hill” vision that appears to be the plan for the eurozone is that hilltops tend to have limited space. We can’t all live up there at the same time. That sort of limits the value of the shining low-debt city on the hill as a shared vision for a continental union. Oh well.

    Posted by Pterrafractyl | December 6, 2011, 1:47 pm
  9. There’s a new, emerging bonus to the eurozone crisis and the proposal to channel the bailout funds through the IMF. It turns the eurozone crisis into a potential political cudgel for nationalist politics across the world. Case in point:

    Worries about the IMF’s risk are also brewing in Washington.

    By Lesley Wroughton

    WASHINGTON | Fri Dec 9, 2011 4:50pm EST

    (Reuters) – The prospect of European heavyweight economies like Italy or Spain turning to the IMF for emergency rescue loans is worrying some nations that fear they could suffer losses on the funds they have extended to the IMF.

    Despite the International Monetary Fund’s stable record – no borrower has ever defaulted on an IMF loan and no country has ever lost money lending to the IMF – there are concerns about the IMF’s growing exposure to the euro zone.

    That exposure could take a quantum leap if Italy and Spain need bailouts, a level of assistance that would almost certainly dwarf the loans already approved for Greece, Ireland and Portugal in deals engineered with the European Union.

    Emerging market countries, which are contemplating lending more money to the IMF — which couples monetary assistance with tough conditions that seek to ensure a country does not default — have raised concerns about risks to the IMF’s capital, officials from developing countries told Reuters.

    Worries about the IMF’s risk are also brewing in Washington.

    Four U.S. lawmakers who met with IMF chief Christine Lagarde this week expressed unease over the risk the fund would take on with a bigger role in Europe.

    A request for a big IMF loan for Italy or Spain would put the United States, which holds veto power over most IMF lending decisions, in an uncomfortable spot.

    The American public is still stung by the U.S. government’s big bailouts for banks during the 2007-09 financial crisis and fears that mounting U.S. debts imperil the nation’s future.

    With President Barack Obama facing a tough battle for re-election in November, the White House is not keen to appear as Europe’s savior, and the administration’s message to Europe has consistently been: Put more of your own money on the line.

    Indeed, Republican lawmakers are seeking to yank a $108 billion loan the United States approved for the IMF in 2009, a move that would undercut Washington’s ability to influence the conditions attached to IMF loans.

    DeMint said he would seek to force another vote to stop U.S. Treasury Secretary Timothy Geithner from supporting more European bailouts. The Senate voted 55-44 in June against a proposal by DeMint to repeal IMF loan authority.

    Posted by Pterrafractyl | December 10, 2011, 3:46 pm
  10. Social welfare spending AND defense? This is going to be interesting:

    Merkel, Sarkozy to Europe: shelve your sovereignty, save the euro

    The plan put forth from the German and French leaders to save the euro amounts to a call for European states to give up full control over their own spending.

    By Dan Murphy, Staff writer / December 8, 2011

    An end to sovereign control over European budgets. That was the big idea that Germany’s Angela Merkel and France’s Nicolas Sarkozy outlined in a letter to European Council President Herman Van Rompuy Wednesday.

    The meat of the proposal

    A lot of the language around this issue has been indirect – not least among the European politicians who favor giving Brussels control over the budgets of member states like Italy and Spain, whose struggles with sovereign debt and slow growth have terrified investors and economists about the potential for a cascade of European defaults.

    Reuters said these European politicians are calling “to toughen up fiscal governance via treaty changes.” But the proposal amounts to offering Europe a choice: Give up domestic political control over how much you spend on social welfare and defense (for instance) or risk the demise of the euro.

    I wonder if that was journalistic artistic license at work or if social welfare and defense spending really are the target areas being talked about for the new “adult supervised” eurozone? This will be fascinating because powerful forces in every eurozone country would LOVE to be able to slash social spending and blame it on the big bad Germans. We might be looking at the world’s first outsourcing of the role of the “bad cop” in domestic politics. But part of the incentive will involve the domestic politicians demonizing Berlin for imposing the cuts. So they’re going to have to demonize Berlin while simultaneously making the case for staying in the eurozone. Have fun with that.

    I also wonder how Turkey’s generals feel about joining the EU after hearing about that defense spending oversight.

    Posted by Pterrafractyl | December 10, 2011, 11:13 pm
  11. This explains a lot:

    The Germans, for their part, seem almost to welcome the collapse of market confidence: without the rising pressure from markets, Silvio Berlusconi would not have resigned as prime minister of Italy. And without the incentive of fear, most European partners would have been more reluctant to give Brussels oversight authority over national budgets — and the right to impose sanctions for violators.

    The Germans had a strategic insight or advantage to let the crisis get to the threshold within the European Union necessary for France to be willing to hand over the kind of sovereignty the country has always resisted,” said Jacob Funk Kirkegaard of the Peter G. Peterson Institute for International Economics in Washington. “You could say that the crisis has either been the wake-up call or the tool that Germany has used to beat them into submission.”

    Wow, so it’s now openly discussed in the press how it seems that the Berlin was fanning the flames of crisis in order to brow beat its neighbors into submission. And yet everyone acts like these elites are acting in good faith. Is conniving economic colonialism seriously the foundation for the new union? That may not help with social cohesion in the long run.

    Also, don’t be too surprised if we see the “bond vigilante”/austerity political theatrics show come to the US if the eurozone ever gets the short term bond issues with the P.I.I.G.S. under control. Note that the Jacob Funk Kirkegaard fellow that made the above insights works for the Peter G. Peterson Institute for International Economics. I can’t imagine that they aren’t overwhelmed with joy to see the new permanent poverty engine coming to the EU, and all due to an international sovereign lending crisis fanned on by the EU’s economic heavyweights playing chicken with the eurozone public’s lives. Not only are they probably pleased but they’re probably taking notes:

    Ellen Brown

    Civil litigation attorney; author, ‘Web of Debt’

    Super Committee Deadlock: Heads They Win, Tails We Lose
    Posted: 11/18/11 11:55 AM ET

    For the deficit hawks, however, it all seems to be going according to plan. The super committee is characterized as an emergency measure that was rushed through to avoid an arbitrarily imposed August deadline for freezing the debt ceiling, but it has actually been in the works for years. In 2009, it was called the “Bipartisan Task Force for Responsible Fiscal Action”. That plan died when its Senate sponsors, Judd Gregg and Kent Conrad, failed to secure 60 votes for passage in the Senate. The Gregg-Conrad bill was criticized as railroading through legislation that would unconstitutionally slash domestic services without congressional debate, but its task force would actually have been LESS autocratic than the super committee, which has sweeping powers and needs only a simple majority among its 12 members to prevail.

    What has been forced out of the debate is whether cutting the budget is a good idea at all. The Peter Peterson Foundation, which has been pushing “austerity” for years, has finally gotten its way. Hedge fund magnate Peter G. Peterson was Chairman of the Council on Foreign Relations until 2007 and head of the New York Federal Reserve between 2000 and 2004. He made his fortune with the controversial Blackstone Group, which he co-founded and chaired for many years. The Peter Peterson Foundation was established in 2008 with a $1 billion endowment to raise public awareness about U.S. fiscal-sustainability issues related to federal deficits, entitlement programs, and tax policies. The money was used to spearhead a massive campaign to reduce the runaway federal debt. Hysteria over the debt then prompted Tea Party newbies in Congress to hold a gun to Congress’ head by arbitrarily capping the debt.

    In the campaign to educate us to the debt’s perils, we were repeatedly warned that when foreign lenders decided to pull the plug, the U.S. would have to declare bankruptcy; that we were mortgaging our grandchildren’s futures and selling them into debt-slavery; and that all this was the fault of the citizenry for borrowing and spending too much. The American people, who are already suffering massive unemployment and cutbacks in government services, would have to sacrifice more and pay the piper more, just as in those debt-strapped countries forced into austerity measures by the IMF.

    You have to give credit where credit is due: Spending a billion dollars of your own ill-gotten gains to threaten the US public that if they don’t gut their investments in their human capital and the institutions that educate and prepare future generations, they’ll be selling their children and grandchildren into debt-slavery. And the only solution is to throw the country into a deep depression while we eviscerate the safety-net and “get disciplined”.

    I guess we should all stop whining and just accept avoidable mass impoverishment. It’s only one or two lost decades. Hopefully.

    Posted by Pterrafractyl | December 11, 2011, 5:19 pm
  12. Posted by Pterrafractyl | December 11, 2011, 8:16 pm
  13. Uh oh Belgium, it looks like y’all got weaker then expected growth coming up. And that means the eurozone Powers That Be get to take their new powers out for a spin. It’s the new normal:

    Europe’s New Powers Over National Budgets Face Test in EU-Belgium Clash
    By James G. Neuger – Jan 9, 2012 6:42 AM CT

    Europe’s newfound powers over national taxing and spending face a first test when the European Commission prods Belgium to make deeper savings just over a week into the budget year.

    Under authority granted last month, the commission will on Jan. 11 decide whether an emergency Belgian spending freeze is enough to drive the deficit below the euro-area limit in 2012.

    A negative verdict would expose Belgium, saddled with Europe’s fifth-highest debt, to potential sanctions in a precedent-setting trial of rules designed to overcome investors’ skepticism about the euro area’s response to the two-year-old debt crisis.

    “The key challenge for Belgium is the reduction of its sizable public debt,” Olivier Bizimana, an economist at Morgan Stanley in London, said in a research note. “Near-term pressures on public debt have significantly increased, with rising costs of borrowing, lower growth and a still-fragile banking sector.”

    With an economic philosophy split between the fiscal rigor of its Dutch-speaking north and pro-welfare bias of the French- speaking south, Belgium is a laboratory for the political conflicts that bedevil Europe’s broader crisis management. Efforts to heal that divide continue today when German Chancellor Angela Merkel meets French President Nicolas Sarkozy in Berlin as part of ad hoc consultations leading up to the next European crisis summit on Jan. 30.

    Budget-Cutting Powers

    As home to the European Union’s institutions, Belgium tends to follow the EU script, as in the 1990s when the parliament granted the prime minister extraordinary budget- cutting powers to make sure the country would qualify for the euro in the first wave in 1999.

    More recently, the new government was still being formed when it took less than 24 hours to reach a budget deal after Standard & Poor’s Ratings Services on Nov. 25 lowered Belgium’s credit rating one step to AA with a negative outlook.

    The next broadside came on Jan. 5, when EU Economic and Monetary Affairs Commissioner Olli Rehn calculated that weaker- than-projected growth would push the 2012 deficit to 3.25 percent of gross domestic product, above the government’s target of 2.8 percent.

    The EU’s prediction weighed on Belgian bonds (GDBR10), pushing the extra yield over German debt up by 6 basis points to 278 basis points, the most since the six-party coalition took office on Dec. 6 after 18 months of wrangling. The spread narrowed to 270 basis points at 1:41 p.m. in Brussels today.
    ‘Matter of Urgency’

    Rehn gave Prime Minister Elio Di Rupo’s government two options: immediately slice 1.2 billion euros to 2 billion euros ($1.5 billion to $2.6 billion) out of the budget, or set aside a similar-sized reserve by freezing spending in the run-up to a planned February budget review. Rehn called it “a matter of urgency” to guarantee “a timely and lasting correction of the excessive deficit in 2012,” according an EU letter published by De Tijd newspaper on its website.

    Belgium went for the second option — a 1.3 billion-euro freeze that will have “zero impact” on the population, Budget Minister Olivier Chastel told Belga newswire yesterday. The cap is on spending slated for the end of the year, he said.

    The commission considers the spending freeze a “positive piece of news,” Amadeu Altafaj, Rehn’s spokesman, told reporters today in Brussels. The EU will issue an official assessment “soon,” Altafaj said while declining to give a specific date.

    ‘Very Anemic’

    Belgium’s first-half economic prospects range from “very anemic (BEGDPQS) growth” at best to a contraction of 0.5 percent at worst, said Luc Coene, head of the Belgian central bank. He backed the EU push for budget cuts and steps to boost the nation’s “meager” employment level.

    “It is very important to make this commitment to reassure the markets and reduce our interest burden,” Coene said in a joint interview with La Libre Belgique newspaper and RTBF radio.

    Expansionary austerity: It’s the new “trickle down economics”:

    Germany Auctions Bills With Negative Yield
    By Lukanyo Mnyanda and Brian Parkin – Jan 9, 2012 6:30 AM CT

    Germany sold six-month treasury bills at a negative yield for the first time amid demand for the debt securities of Europe’s largest economy as a haven from the sovereign debt crisis in neighboring nations.

    The government auctioned 3.9 billion euros ($4.98 billion) of securities maturing in July at an average yield of minus 0.01 percent, the Federal Finance Agency said in an e-mailed statement today. It was the first time it sold the securities at a negative yield, Joerg Mueller, a spokesman in Frankfurt, said in a telephone interview. The Netherlands sold securities due in March at a yield of zero on Jan. 3.

    “For the German taxpayer, this is obviously good news,” said David Schnautz, a fixed-income strategist at Commerzbank AG in London. “There are investors out there who really worry about the return of their money. That’s why they are OK donating to Germany some of their money just to make sure they get it back. It just underpins how nervous the overall market is.”

    Incredibly damaging economic policies that somehow enrich the ultra-rich: nothing new here!

    Posted by Pterrafractyl | January 9, 2012, 8:24 am
  14. Jamie Dimon just discussed his vision for how to fix the housing market. It seems to involve putting someone “in charge” of the “housing market”, locking mortgage lenders and regulators in a room until something was worked out, getting rid of pesky new underwriting regulations, and kick starting the still-dead mortgage-backed securities market.

    There isn’t anything particularly surprising about Jamie Dimon wishing for some sort of banker czar to swoop in an return things to the good ol’ days of 2007. It’s just always a little unsettling when these guys talk in a “if I where in charge” manner. Because 1. They ARE in charge, just not quite so directly. and 2. They seem to want to be more directly in charge. You have to wonder how long it’ll be before we have a nice new “bank czar” set up to cut through all the regulatory “red tape” that’s hindering “innovation”. The installation of a single person or panel that gets extra-“take charge” powers seems to be one type of solution to endless “grid-lock” that can garner bipartisan support these days (e.g. the Simplson-Blowles Debt Panel that wanted to throw momma from a train). With Detroit already on the chopping block in Michigan’s emergency financial management social experiment and the eurozone’s grand adventure in some sort of currency-union fascist financial death trap, the czar/emergency manager/appointed technocrat form of soft-fascism is poised to get showcased in quite a few democratic countries in 2012.

    Posted by Pterrafractyl | January 15, 2012, 9:22 pm
  15. @Pterrafractyl: There does appear to be some hope in Greece, though.

    A Greek member of a ‘alternate history’ forum I frequent often, posted a very interesting poll on Sat. morning:


    If the left truly has made that many gains, then that is great news. Let us hope the conservative ND will suffer humilation as well. =)

    Posted by Steven L. | January 15, 2012, 11:26 pm
  16. Posted by Pterrafractyl | February 20, 2012, 9:02 am
  17. More on the “permanent troika”:

    De Jager Backs ‘Permanent Troika’ in Athens to Monitor Economy
    By Fred Pals – Feb 20, 2012 10:05 AM CT

    Dutch Finance Minister Jan Kees de Jager said he supports a permanent presence of international monitors in Athens to oversee Greece’s implementation of austerity measures as part of a second rescue program.

    I am myself in favor of a permanent troika in Athens,” De Jager told reporters in Brussels today, referring to the European Commission, European Central Bank and International Monetary Fund.

    “When you look at the derailments in Greece which have occurred several times now, it is necessary that there is some kind of permanent presence of the troika in Athens,” he said. “But I am also in favor of an escrow account where the money is disbursed first and then from that escrow account we have more certainty.”

    “We will listen to the findings of the troika,” De Jager said of today’s meeting. “We need guarantees on supervision. We need signatures of the leaders of the two biggest political parties. They need to sign for after the elections. Greece needs to meet a whole set of conditions. It needs to happen and if not we won’t and can’t sign for a new deal.”

    Posted by Pterrafractyl | February 20, 2012, 1:37 pm
  18. Posted by Pterrafractyl | February 20, 2012, 11:15 pm
  19. Here’s an article filled with reminders of the volatile nature of Greece’s neighborhood:

    Turkey-Greece engage in mock dogfights over Cyprus as Israeli PM arrives
    Published on February 17, 2012

    GREEK AND Turkish jets tangled in mock dogfights in Cypriot airspace yesterday just as Israeli Prime Minister Benjamin Netanyahu was arriving on the island, reports said.

    According to Sigma, around 11am three Greek Mirage-2000 fighters began shadowing two Turkish F-16 jets after the latter flew between Rhodes and Crete on their way from the eastern Mediterranean where Turkish ships were conducting wargames with live ammunition.

    The Turkish military exercise, the Foreign Minister said earlier, took place within Cyprus’ Exclusive Economic Zone, in waters south of the island and close to, or inside, Block 12.

    The Greek jets reportedly pursued the Turkish fighters all the way back into the Nicosia Flight Information Region, at which point the Turkish planes changed course and headed off toward the Turkish mainland.

    Meanwhile Greek Foreign Minister Stavros Dimas yesterday referred to Turkey’s continuing challenges to Greece’s airspace and sovereign rights, urging Ankara to respect international law and the Law of the Sea.

    “It is a behaviour that must stop. Greece defends its rights. Unfortunately, instead of talking today about what unites us, we see challenges that undermine the prospects for improvement of our relations”, Dimas said.

    He was speaking during a joint press conference in Athens with NATO Secretary General Anders Fogh Rasmussen.

    “As we have repeatedly emphasized in the past, Greece and Cyprus do not intend to follow Turkey in the rise of threats and challenges”, Dimas added.

    Posted by Pterrafractyl | February 20, 2012, 11:36 pm
  20. You have to wonder if the gold seizure clause is going to apply to other eurozone nations…could be a lot of yellow metal sitting in those vaults:

    Growing Air of Concern in Greece Over New Bailout

    Published: February 21, 2012

    ATHENS — Even as the European Union signed off Tuesday on a sweeping new arrangement to help avert a Greek default and stabilize the euro, many people here on the streets saw no end to their country’s woes.

    “They don’t want to kill us but keep us down on our knees so we can keep paying them indefinitely,” said Eva Kyriadou, 55, as she stood in a square in downtown Athens where the smell of tear gas and the smashed facades from last week’s violent riots still lingered.

    Indeed, the deal was reached amid a growing air of stalemate and concern. Greece’s foreign lenders expressed doubts that the new austerity measures the Greek Parliament passed last week — including a 22 percent cut to the private-sector benchmark minimum wage — would actually be carried out, at least before early national elections as soon as April.

    Others are concerned that in the fine print of the 400-plus-page document — which Parliament members had a weekend to read and sign — Greece relinquished fundamental parts of its sovereignty to its foreign lenders, the European Commission, the European Central Bank and the International Monetary Fund.

    This is the first time ever that a European and probably an O.E.C.D. state abdicates its rights of immunity over all its assets to its lenders,” said Louka Katseli, an independent member of Parliament who previously represented the Socialist Party, using the abbreviation for the Organization for Economic Cooperation and Development. She was one of several independents who joined 43 lawmakers from the two largest parties in voting against the loan agreement.

    Ms. Katseli, an economist who was labor minister in the government of George Papandreou until she left in a cabinet reshuffle last June, was also upset that Greece’s lenders will have the right to seize the gold reserves in the Bank of Greece under the terms of the new deal, and that future bonds issued will be governed by English law and in Luxembourg courts, conditions more favorable to creditors.

    While their country’s fate is being decided in abstract, high-level negotiations in Brussels, Berlin and Paris as much as in Athens, many Greeks said they had begun to feel that the debt writedown and new loan is aimed at saving the banks more than the country and its citizens.

    Posted by Pterrafractyl | February 21, 2012, 8:29 pm
  21. Ok, so it looks like the 2nd bailout of Greece will literally involve Greece making a constitutional change so that it can directly bail out the banksters. That’s right, Greece, itself, will be the entity that actually funds the new bailout “escrow” account using “internally generated funds”, and the banksters get first dibs on it all. Wow.

    Posted by Pterrafractyl | February 22, 2012, 10:45 am
  22. Since the new Greek bailout terms include raiding Greece’s gold reserves, Italy really needs to get some clarification on whether or not this rule is going to apply to them because, they got A LOT of gold and Berlin is already salivating:

    Memo From Germany
    Success and Advice Cast a Giant as a Villain, Not a Model, in Europe

    Published: November 15, 2011

    BERLIN — Throughout the crisis in the euro zone, as governments have fallen, debt burdens have mounted and economies have stagnated or shrunk, Germany has floated above the fray. While its economy has hummed along nicely, its leaders have steadfastly insisted that the path to redemption for the debtors lies in austerity and suffering.

    Last week, Germany was awash with reports of a proposal floated at the Group of 20 meeting that might have allowed the International Monetary Fund to draw on German gold reserves to bolster Europe’s rescue fund.

    The condemnation was swift and disproportionately harsh for a suggestion that was basically doomed from the start. “The German gold reserves must remain untouchable,” said Philipp Rösler, the economy minister and vice chancellor.

    A cartoon in the newspaper Süddeutsche Zeitung showed three men trying to crack a bank safe marked “Bundesbank gold and foreign currency reserves,” a reference to the German central bank.

    The masked man attacking the safe with a drill had the German abbreviation for the European Central Bank on his back, while the one placing the dynamite bore the letters for the International Monetary Fund. Holding a flashlight was the president of the European Council, Herman Van Rompuy.

    Leading politicians here defended the independence of the Bundesbank but also took the opportunity to call for Italy to sell off its own gold reserves, the fourth largest in the world after the United States, Germany and the International Monetary Fund.

    “I am of the opinion that a country should do everything in its power to help itself,” said Gunther Krichbaum, chairman of the committee on European affairs in the German Parliament, who spoke in favor of Italy’s selling gold to help with its $2.6 trillion debt, “and in this regard Italy is far from exhausting its options.”

    Posted by Pterrafractyl | February 22, 2012, 7:12 pm
  23. Europe’s oligarchs just wanted to remind you all that the eurozone’s unions and labor protections are doomed, troika or not.

    Posted by Pterrafractyl | February 23, 2012, 8:17 am
  24. In case you were interested in just how much total gold might get looted from the PIIGS coffers if the new gold-seizure provision gets applied throughout the eurozone, Zerohedge has an estimate: 3233.5 tons:

    Projected PIIGS Pillage: 3233.5 Tons Of Gold To Be Confiscated By Insolvent European Banks
    Submitted by Tyler Durden on 02/23/2012 – 09:49 Creditors fixed Greece Ireland World Gold Council

    While hardly discussed broadly in the mainstream media, the top news of the past 24 hours without doubt is that in addition to losing its fiscal sovereignty, and numerous other things, the Greek population is about to lose its gold in a perfectly legitimate fashion, following amendments to the country’s constitution by unelected banker technocrats, who will make it legal for Greek creditors – read insolvent European banks – to plunder the Greek gold which at last check amounts to 111.6 tonnes according to the WGC. And so we come full circle to what the ultimate goal of banker intervention in the European periphery is – nothing short of full gold confiscation. So just how much gold will be pillaged by the banker oligarchy (it is amusing how many websites believe said gold is sacrosanct by regional national banks, and thus the EUR is such a stronger currency as it has all this ‘gold backing’ – hint: it doesn’t, as all the gold is about to be transferred to non-extradition countries)? As the World Gold Council shows in its latest update, between all the PIIGS, who will with 100% certainty suffer the same fate as Greece (which has shown that unlike during World War 2, it is perfectly willing to turn over and do nothing) there is 3234 tonnes of gold to be plundered. And likely more as further constitutional amendments will likely make the confiscation of private gold the next big step. how much does this amount to? At today’s prices this is just shy of $185 billion. Of course by the time the market grasps what is going on the spot price of the yellow metal will be far, far higher. Or, potentially far, far lower and totally fixed as the open gold market is eventually done away with entirely in a reversion to FDR gold confiscation and price fixing days.

    There’s a nice chart of global gold holdings at the link.

    Posted by Pterrafractyl | February 23, 2012, 10:29 am
  25. @Pterrafractyl–

    Reading the Seagraves’ “Gold Warriors” will give the listeners an idea of just how deeply corrupt the world’s gold market really is.

    The book is heavily accessed in For The Record broadcasts.

    Posted by Dave Emory | February 23, 2012, 10:43 am

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