COMMENT: We are seeing the continued development of “The European Disunion.” The U.S. Department of the Treasury, Paul Krugman and a growing chorus of European voices are noting Germany’s economic policies as being brutally restrictive toward other European countries and the world as a whole.
The German policy vector is deliberate, a continuation of “war by other means.”
Noteworthy, as well, is the openly chauvinistic tone of the German press and German officialdom. Berating other European nations as being inferior is more or less routine for the Germans at this point.
Now, former Italian Prime Minister Romano Prodi has issued a call for a “Latin Front” to openly oppose German policy. It will be interesting to see if this becomes a reality, and what retaliation this draws from Germany.
Below, we review the European Monetary Union as the realization of a long-standing blueprint for German European domination and, through that, world domination.
- Writing in 1943, Paul Winkler foresaw that the Prusso-Teutonics would realize their goals through the creation of a German-dominated central European economic union (bearing a striking resemblance to today’s European Monetary Union.) One of the principal influences on List’s thinking was the “continental” concept of Napoleon, who attempted to economically unite Europe under French influence.
- List’s blueprint was echoed by the German Chancellor with regard to German’s goals in the First World War.
- The Listian model was put into effect by the Third Reich, as can be gleaned by reading Dorothy Thompson’s analysis of Germany’s plans for world dominance by a centralized European economic union. Ms. Thompson was writing in The New York Herald Tribune on May 31, 1940! Her comments are reproduced by Tetens on page 92.
- The European Economic Community was formally articulated by Reich officials during the war, with the clear design to extend and amplify the arrangement after the war. Below, we quote Gustave Koenigs, Secretary of State at a 1942 conference about the European Economic Community.
EXCERPT: The plot is thickening fast in Italy. Romano Prodi – Mr Euro himself – is calling for a Latin Front to rise up against Germany and force through a reflation policy before the whole experiment of monetary union spins out of control.
“France, Italy, and Spain should together pound their fists on the table, but they are not doing so because they delude themselves that they can go it alone,” he told Quotidiano Nazionale.
Should Germany persist in imposing its contractionary ruin on Europe – “should the euro break apart, with one exchange rate in the North and one in the South”, as he puts it – Germany itself will reap as it has sown. “Their exchange rate will double and they will not sell a single Mercedes in Europe. German industrialists know this but all they manage to secure are slight changes, not enough to end the crisis.” . . . .
. . . . Professor Prodi is the prime minister who prepared Italy for EMU in the 1990s, and then presided over the launch of the euro as European Commission chief. Some readers may remember that I crossed swords with him 15 years ago, but that dispute is ancient history now and has no bearing on today’s economic debate.
He rightly warns that nothing of substance will change as a result of the Bundestag elections. “German public opinion is by now convinced that any economic stimulus for the European economy is an unjustified help for the ‘feckless’ South, to which I have the honour of belonging. They are obsessed with inflation, just like teenagers obsessed with sex. They don’t understand that the real problem today in deflation, as I have been saying for a year,” he said.
This is the nub of the matter. The policy regime has become maniacally restrictive because every decision is filtered through “game theory” calculations, the belief in Berlin that the naughty Latins will somehow cheat unless their feet are held to the fire.
The ECB is playing this game too. It is no longer a central bank. It has become an enforcer of political pressure. The ECB is not even trying to meet its 2pc inflation target. It has abandoned its 4.5pc M3 money growth target and its twin pillar monetary structure. . . .
. . . . Be that as it may, Il Professore said the European Union – which he led for five years – has broken down as functioning system. “Today there is only one country and only one in command: Germany. ”
He said it has long been obvious that Italy cannot restore control over its public finances in recession conditions. “The debt to GDP ratio has been rising for three years despite austerity. It is a failed policy.” (119.3pc in 2010, 120.8pc in 2011, 127pc in 2012, 132.3pc in 2013, according to the IMF’s Fiscal Monitor).
This too goes to the heart of the matter. Italy is a fiscal saint, the only major country in the industrial world to run a primary budget near balance for over seven years, and a surplus this year of 2.5pc of GDP. Yet the debt trajectory is accelerating upwards.
This is entirely due to the “denominator effect”. The contraction of nominal GDP – the result of a quadruple whammy of tight fiscal, tight money, tight credit, (regulatory overkill) and a Teutonic exchange rate – has forced Italy to service a rising debt burden on a shrinking economic base. It is a classic debt-deflation trap, as described by Irving Fisher 1933.
Il Professore says Italy should be given a waiver on the €51bn put aside in budget deficit calculations for EU bail-out policies, giving the country leeway for a mini-blitz on investment. Better still, the Maastricht treaty should be changed to eliminate the 3pc deficit ceiling. “It is stupid that this has not been changed for 20 years. A 3pc deficit makes sense at certain moments, at other times it should be zero, at others 4pc or 5pc.”
Stupidissimo indeed. But instead of revising Maastricht, Berlin has rammed through the even stupider Fiscal Compact, locking Europe into 20 years of chronic deflation and depression. (Yes, you could in theory offset that with monetary stimulus, but the opposite is happening. EMU monetary policy is becoming tighter and tighter as incipient deflation raises the “real” interest rate.) . . .
The Thousand-Year Conspiracy; by Paul Winkler; Charles Scribner’s Sons [HC]; 1943; pp. 15–16.
. . . . Charles Andler, a French author, summed up certain ideas of List in his work, The Origins of Pan-Germanism, (published in 1915.) ‘It is necessary to organize continental Europe against England. Napoleon I, a great strategist, also knew the methods of economic hegemony. His continental system, which met with opposition even from countries which might have profited from such an arrangement should be revived, but, this time, not as an instrument of Napoleonic domination. The idea of united Europe in a closed trade bloc is no longer shocking if Germany assumes domination over such a bloc—and not France. [Emphasis added.] Belgium, Holland, Switzerland, willingly or by force, will enter this ‘Customs Federation.’ Austria is assumed to be won over at the outset. Even France, if she gets rid of her notions of military conquest, will not be excluded. The first steps the Confederation would take to assure unity of thought and action would be to establish a joint representative body, as well as to organize a common fleet. But of course, both the headquarters of the Federation and its parliamentary seat would be in Germany. [Emphasis added.]”. . . .
. . . . This is a direct translation of [German Chancellor] Bethman-Hollweg’s internal memo on Germany’s war aims, from September 1914. . . .
“. . . . We must create a central European economic association through common customs treaties, to include France, Belgium, Holland, Denmark, Austria-Hungary, Poland and perhaps Italy, Sweden and Norway. This association will not have any common constitutional supreme authority and all its members will be formally equal, but in practice will be under German leadership and must stabilize Germany’s economic dominance over ‘Middle Europe’ . . .”
Germany Plots with the Kremlin; T.H. Tetens; Henry Schuman [HC]; 1953; p. 92.
. . . . The Germans have a clear plan of what they intend to do in case of victory. I believe that I know the essential details of that plan. I have heard it from a sufficient number of important Germans to credit its authenticity . . . Germany’s plan is to make a customs union of Europe, with complete financial and economic control centered in Berlin. This will create at once the largest free trade area and the largest planned economy in the world. In Western Europe alone . . . there will be an economic unity of 400 million persons . . . To these will be added the resources of the British, French, Dutch and Belgian empires. These will be pooled in the name of Europa Germanica . . .
“The Germans count upon political power following economic power, and not vice versa. Territorial changes do not concern them, because there will be no ‘France’ or ‘England,’ except as language groups. Little immediate concern is felt regarding political organizations . . . . No nation will have the control of its own financial or economic system or of its customs. [Italics are mine–D.E.] The Nazification of all countries will be accomplished by economic pressure. In all countries, contacts have been established long ago with sympathetic businessmen and industrialists . . . . As far as the United States is concerned, the planners of the World Germanica laugh off the idea of any armed invasion. They say that it will be completely unnecessary to take military action against the United States to force it to play ball with this system. . . . Here, as in every other country, they have established relations with numerous industries and commercial organizations, to whom they will offer advantages in co-operation with Germany. . . .
Europaische Wirtschafts Gemeinschaft (European Economic Community–translation).
. . . At the moment the so-called “European Economic Community” is not yet fact; there is no pact, no organisation, no council and no General Secretary. However, it is not just a part of our imagination or some dream by a politician — it is very real. . . .
. . . Its roots are in the economic co-operation of the European nations and it will develop after the war into a permanent European economic community. . . .
Oh great. This probably wasn’t the ‘front’ Prodi had in mind. The EU is getting a Tea Party:
Yeah, someone should probably look into the backroom IMF death threats:
Here’s a bit more on the scene that brought Merkel to tears. It yields some surprising insights into the mind of Merkel:
“Instead, a cornered Ms Merkel threw the French and American criticism back in their faces. If Mr Sarkozy or Mr Obama did not like the way her government ran, they had only themselves to blame. After all, it was their allied militaries that had “imposed” the German constitution on a defeated wartime foe six decades earlier.”
Aha. Well, if that’s how it goes, a new Marshall plan should be just around the corner, right?
Here’s a fascinating look at how the German mainstream media is coming to grips with the fact that the country suddenly has a new empire:
While it was nice to see a long article reflecting on the fact that “an empire is in play, at least in the economic realm,” it was still somewhat disturbing to see a long list of examples of how Berlin is effectively running Europe coupled with discussion of the view that “Germany is too small and hesitant to effectively lead” and his really just a “semi-hegemon”. Is that the best take away lesson here?