Oct 162012
 
 October 16, 2012  Posted by at 9:47 pm Finance
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While everybody was asleep in a grandiose globalization and unification dream, a dream whose benefits and desirability were – and still are – hardly ever questioned if at all, separate languages and cultures simply remained what they were: separate. Now that globalization starts to show its dark and ugly flipside of economic depression, a repeal of many unifications and a split-up of larger entities, created for economic and political reasons only, into their smaller components, is inevitable.

Unfortunately, the architects who designed and built the larger entities are still in power. And they – which is probably also inevitable – go for double or nothing. That is a real and present danger for Europe, where Europeanization or even Germanification are the prescription du jour for the poor southern Club Med countries and everyone else, but the ultimate diagnosis will be the Club-medification (or Club-medication?!) of the people in the richer north. And that will lead to trouble. Lots of it.

The idea behind the EU, which can be summarized as peace and cooperation in Europe, was good in essence, and it worked for a pretty long time too, though how much of that was due to strong economic growth all over deserves more attention than it gets. The problem with the EU is the ever stronger centralization push that has developed from the much simpler roots that got the project started in the 1950s. The eurocrisis reinforces this push, which at the same time clashes with its direct opposite: a desire for decentralization on the ground.

And there lies the key to why the Nobel Peace Prize for the EU is so cynically wrong. If the EU keeps on pushing for more centralized powers to be put in its own hands, powers that will need to be taken away from member countries, it will not be a force for peace, but for fighting in the streets and other kinds of conflict and dissension. Not exactly Alfred Nobel's intention for his Peace Prize.

Then again, I think it's fair to say that the EU itself, the original idea, is not the main issue; it's with the introduction of the euro that things went really awry, and especially with the lack of preparation that was put in. We can safely say that was the moment megalomania took over.

Also, the eurozone is not some inevitable development flowing out of the EU ideal of cooperation. The EU could, and still can, exist either without a currency union or with a – much – smaller one. Countries like Britain, Sweden and the Czech Republic are appreciated and appreciative members of the EU who have their own currencies. And there is no reason why for instance Greece and Spain could not be in the same position. They would have to make the move back to their own currencies, but if that would help solve both their problems and those of the other eurozone countries, it warrants at least a thorough discussion.

Still, the EU wants no part of such discussions. The first reason for this may still come from the financial world. A move from the euro to a drachma or peseta would be doable only through some sort of sovereign default. And that would trigger credit events and force the pay out of derivative contracts, potentially to the tune of trillions of dollars. These contracts, however, are primarily held by financial institutions, so why should the people pay? These debts too can be restructured, and will, there's no other solution.

What's happening now is that the EU risks scaring away Britain, Sweden, Denmark, none of whom have any desire to lose their political powers to Brussels, even less than the rest. In other words, Brussels is not a unifying force anymore, but a divisive one. If it is allowed to stay on the current track, it will blow up the eurozone first and the EU itself shortly after.

The second reason for the EUs stubborn refusal to even discuss letting member countries leave the eurozone lies squarely in the bureaucracy. The centralization meme is so strong in Brussels any contradictory voices are ostracized. That is true too for politicians in power in membership states.

If anything exemplifies this, it must be that a "new" European Master Plan, an obviously purely political design, was introduced by German Finance Minister Wolfgang Schäuble (Schaeuble) this week. The boundaries between powers and responsibilities have faded to the point where measures that will have far-reaching consequences for the level of democratic decision making in 17, if not 27, very different countries are pushed by a finance minister. Certainly something to ponder.

The EU is controlled by a large and opaque bureaucratic class, not unlike those in China and the USSR. A difference is that it’s democratically elected in name, but that doesn't mean much: nobody votes (in a lovely ironic twist, the only time voters do turn up is for saying no to for instance a European constitution). Besides, most of the important posts in Brussels, Strasbourg, Frankfurt, are held by non-elected people. So much for promoting democracy.

Another difference with other bureaucracies is that nobody seems to know who exactly leads the EU, so accountability is impossible to assign. Who knows what exactly are the differences in responsibilities between Mario Barroso and Herman van Rompuy, just to name an example? Do they themselves even know? The real power lies with the European Commission (EC), but who truly knows what that even is, or who's part of it? Politburo, anyone? And we're not even talking yet about what and where the ECB is in all this, which has all but openly admitted it has political goals.

If the bureaucracy gets it way, people all over Europe will one day soon wake up to find themselves substantially impoverished AND with much of the political and economic powers over their destinies transferred to Brussels. How do you think that will play out?

What's certain is that we will see a lot more of things like the Spanish army threatening to crush the "vultures" of the Catalan independence movement. That's something the EU could play a positive role in, making sure it's understood those kinds of threats are not acceptable. But that's not happening. They have a Spanish government in place that's on their side, and that's all they're interested in.

It’s not a bad thing for a people to want their own country with its own frontiers, and with the final say in their own affairs, economically, politically, culturally. This right to self-determination is embedded in international law through the UN for good reasons. Why, then, the resistance to let even Greece become "independent", let alone Catalunya, Scotland, Flanders?

The opaque and – to put it mildly – not so democratic leadership follows two one-dimensional dreams, and anyone who gets in the way is swept aside.

They hope that they can keep the eurozone together, with every European's money, credit events can be prevented, and their grand dreams of one Europe can be fulfilled. This by now resembles a giant everything-on-red gamble far more than it does a mere dream. And gambling does not policy make.

There are millions of people in Europe who don't want to be governed by other countries, other cultures, other languages than their own. These sentiments will be strengthened going forward by deteriorating economic conditions, a deterioration guaranteed to evolve precisely because trillions of euros are spent to keep the eurozone together at all costs.

People are certain to rise up against these developments, and violently too, which makes the EU, and those who represent it these days, resemble war-mongers instead of peace-makers. Someone better stop this soon, or the genie will be out of the bottle and not be put back in for decades. The EU leadership in its blind race for increasing power will help all sorts of extreme politicians into their respective saddles, and they won't be able to bully all of them, let alone the people who vote for them, into submission.

Peace prize my … The EU could have been, and probably was for a while, a beneficial institution. Unfortunately it has grown into a bloated, blind, colossal and very dangerous failure. Unless there's a mass wake-up call, and soon, dark days are ahead.

Illustration: An engraving from The London Magazine, January 1775, showing the Goddess of Peace bringing an olive branch to America and Britannia.

 


Home Forums Why The Nobel Peace Prize For The EU Is So Flawed

This topic contains 0 replies, has 0 voices, and was last updated by  Raúl Ilargi Meijer 1 year, 9 months ago.

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October 16, 2012 at 9:47 pm #8426

Raúl Ilargi Meijer

While everybody was asleep in a grandiose globalization and unification dream, a dream whose benefits and desirability were – and still are – hardly e
[See the full post at: Why The Nobel Peace Prize For The EU Is So Flawed]

October 17, 2012 at 9:41 am #6026

Viscount St. Albans

Much of the trouble we face today centers on the issue of ‘Rational Response.’

What is the ‘Rational Response’ to our societal problems.
For example, take two well-known and seemingly intractable problems:
1) Criminals are known to make their entry through the back-door.
2) Strawberry Danish are delicious and fattening.

In consideration of these dilemmas, and the “Rational Response’: I’ve invested in a rowing machine and I’ve taken to wearing two layers of pants at all times.

The double-layered pants offer indispensable reaction time. Before the perpetrator can penetrate the outer fabric en route to my back door, I’m well aware of his intention. Defensive maneuvers can begin with the safety pants still intact.
And the rowing machine, of course, enables me to enjoy all the scrumptious strawberry Danish I can possibly eat without fear of belly fat and outgrowing my safety pants.

So you see, even in our complex and difficult circumstances, the ‘Rational Response’ is indeed possible. You’ve got to work hard to crack the nut before it cracks you.

October 17, 2012 at 2:58 pm #6027

Nassim

“Nigel Farage on the Rise of UKIP, the Fall of Europe, and the Parallels for the US”

http://www.youtube.com/watch?v=9LsQY1OxoEY&feature=player_embedded

Well worth watching. Ilargi’s message, but in a different way.

October 17, 2012 at 8:51 pm #6028

John Day

It’s time to stop piling all the breaking eggs into this one basket.
That is not the way to survival.
It just ups the ante for those who control the basket.
“Everything-on-red” indeed, but you know the house “never-gives-a-sucker-an-even-break” and there’s a magnet under that spinning roulette wheel.
Suckers lose all.
Then what?

October 18, 2012 at 1:42 am #6029

backwardsevolution

Ilargi – great article, well written. Thank you.

“In the prescient words of Leopold Kohr in his 1957 book Breakdown of Nations, “There seems only one cause behind all forms of social misery: bigness. Whenever something is wrong, something is too big.”

That’s a very truthful quote. It’s from a really good article entitled, “Major Powers versus Small Nations: Globalization and the issue of National Sovereignty.” The article makes a really good case for going smaller, and is full of good stats and arguments.

“Since 1972 the king of Bhutan has been trying to make Gross National Happiness the national priority rather than Gross National Product. Although still a work-in-progress, policies instituted by the king are aimed at ensuring that prosperity is shared across society and that it is balanced against preserving cultural traditions, protecting the environment, and maintaining a responsive government.”

Now that’s a novel idea!

“Transnational megacompanies not only tell so called emerging market countries (most of the world) what they will produce, how it will be produced, when it will be sold, and at what price, but they also influence local working conditions, wages, benefits, and labor laws. They often dictate local government monetary, fiscal, trade, and banking policies. International money managers decide which foreign currencies are overvalued and which are not, as well as which countries should be punished for not playing by their arbitrary, self-serving rules. This is truly a one-size-fits-all game.”

http://www.globalresearch.ca/major-powers-versus-small-nations-globalization-and-the-issue-of-national-sovereignty/5307957

October 18, 2012 at 7:28 am #6030

Nicole Foss

Thanks for the Nigel Farage video. He gets a lot of things right, although still seems to have faith in the larger system. It would be interesting to talk to him about the global financial ponzi system.

October 18, 2012 at 5:31 pm #6032

Adam Goodwin

Farage is a nationalist. Nationalists view authority outside their borders as illegitimate, but welcome it domestically. The comment ‘states require consent’ made me chuckle: Farage intended that comment for the EU, but in reality, the countries of the EU had a referendum to establish it. The English state has had no such referendum. It remains a consolidated kingdom.

I would be interested to see if Farage says the same about the Ponzi scheme inside his own country, brought about by the Bank of England. Scratch a nationalist, see a hypocrite bleed.

October 18, 2012 at 9:36 pm #6034

Nicole Foss

Adam Goodwin,

I doubt very much that Farage sees the UK’s own systemic ponzi fraud for what it is. I agree with his position on the fate of the euro, the mayhem that is likely to cause and the fact that further centralization in Europe will do much more harm that good, but his politics and mine are otherwise dissimilar. I would still like to talk to him, but I expect he would find reality as I see it quite threatening.

October 19, 2012 at 4:23 am #6036

Nassim

Given the lack of real options in the UK, I would vote for him over the others. I am not saying here that he is right in every respect, I am simply saying that he has grasped the big picture regarding Europe.

October 19, 2012 at 7:27 am #6037

Anonymous

http://blogs.telegraph.co.uk/finance/ambroseevans-pritchard/100020401/europes-betrayal-of-spain/

Europe’s betrayal of Spain
Ambrose Evans-Pritchard
Sept 27, 2012

We discover – yet again, you might say – that Germany, Holland, and Finland will not stand behind their solemn pledge of solidarity when push comes to shove.

Spain’s premier Mariano Rajoy has been betrayed. Nobody should be entirely surprised if he and the Spanish arch-nationalists in his circle offer a condign riposte, and bring down the entire temple on the heads of the creditor powers.

He bit the bullet and agreed to the highly intrusive terms of a €100bn eurozone rescue for the Spanish banking system on a specific understanding: that the ESM bail-out fund would ultimately take over the burden by recapitalising Spain’s banks directly.

This deal has been breached. Can we believe anything that the Chancellor of Germany, the prime minister of Holland, and the prime minister of Finland say from now on? The EMU rescue edifice is built on sand.

You might say Mr Rajoy had no choice. But he did. There were those whispering in his ear that Spain should instead retake control over its own monetary, exchange, and sovereign policy levers, and break out of its debt-deflation trap.

Such a course might or might not be disastrous for Spain, depending on your analysis of EMU’s structural flaws, but it would certainly be disastrous for German and Dutch banks. (Given that it would cause the collapse of monetary union in the worst possible way).

The Spanish bubble was after all a joint venture. Spain was flooded with cheap capital from Germany and Holland that it could not prevent or control under the EMU system. Did the German and Dutch regulators recognise the danger, or try to stop the excesses? Not really. They were complicit.

The ECB’s uber-loose money (to help Germany when it was in slump) led to negative real interest rates for Spain – minus 2pc for years – that fuelled a massive credit boom. Policy was far too lax for a fast-growing Tiger economy.

Did the Spanish make big mistakes? Of course. But the ECB and the European Commission did not make that critique at the relevant moment. They too were smoking weed.

Be that as it may, Mr Rajoy now learns that the AAA trio will not permit direct recapitalisation of the Spain’s “legacy” banks by the ESM, even after the new European bank regulator is up and running.

The burden will fall entirely on Spain, or so it seems. Spain must raise €60bn in fresh debt on the capital markets to plug the hole, or nearer €150bn if City sceptics are right.

The accord signed by EMU leaders in June is crystal clear, as the European Commission remind the Northern powers yesterday. The purpose was to break the “vicious circle” between banks and sovereign states.
————–
EURO AREA SUMMIT STATEMENT

– 29 June 2012 -

• We affirm that it is imperative to break the vicious circle between banks and sovereigns. The Commission will present Proposals on the basis of Article 127(6) for a single supervisory mechanism shortly. We ask the Council to consider these Proposals as a matter of urgency by the end of 2012. When an effective single supervisory mechanism is established, involving the ECB, for banks in the euro area the ESM could, following a regular decision, have the possibility to recapitalize banks directly. This would rely on appropriate conditionality, including compliance with state aid rules, which should be institution specific, sector-specific or economy-wide and would be formalised in a Memorandum of Understanding. The Eurogroup will examine the situation of the Irish financial sector with the view of further improving the sustainability of the well-performing adjustment programme. Similar cases will be treated equally.

• We urge the rapid conclusion of the Memorandum of Understanding attached to the financial support to Spain for recapitalisation of its banking sector. We reaffirm that the financial assistance will be provided by the EFSF until the ESM becomes available, and that it will then be transferred to the ESM, without gaining seniority status.
—————

The Germans, Dutch and Finns (in particular) say they were bounced into this deal. It would not surprise if they were outmanoeuvred by Italy’s Mario Monti, and if too-clever-by-half Council officials tweaked the language at the last minute. But this was the accord.

It was a key foundation of the global market rally of the last two months. The Nordics have now ripped it up. Investors in Asia and the Middle East might justifiably conclude that the Chancellor of Germany is blowing smoke in their eyes, that Germany will not in fact “save the euro”. Eurozone rhetoric is a sham.

So we are back to crisis.

I have no idea what Spain will do, but emotions are running high and the country – in the words of Confidencial this morning – risks “disintegrating”. We watch and wait to see whether the Basque revolt or the Catalan revolt will detonate first, and whether the Spanish will really use “all means” to hold the union together.

The newspapers ABC and La Razon both called on the government to deploy ” the arms of the state” to stop Catalonia holding an independence referendum.

It is as if the Daily Telegraph were to call for coercion to stop Scottish independence. Imagine the response in Scotland.

Mr Rajoy’s authority is collapsing. Some 84pc of Spaniards have lost confidence in his leadership. The current course is becoming hopeless.

Today he will announce a fresh round of austerity measures to meet EU targets that cannot be met, adhering to reactionary strategy of “internal devaluation” imposed by Germany that is destroying his country.

And now he has just been betrayed by the German bloc anyway. Es el colmo. If he were to request full sovereign rescue, he would most likely be shafted again. Who can blame him for dragging his feet?

The temptation to tell the Germans and Dutch to go to Hell – and to pull the pin on their banking systems – must be growing mightily. Desperate men do desperate things.

October 19, 2012 at 9:06 am #6038

william

maybe just maybe things can crash hard enough to spark ingenuity

Isn’t that how capitalism got moving – a collapsing France with a revolution, a collapsing America and people with backs against the wall grabbed onto something anything to stay afloat – democracy and after a depression capitalism.

Maybe just maybe we can get desperate enough to grab onto something better. Something morally better with greater respect to all nations. Just a dream but its a nice dream.

October 19, 2012 at 10:53 pm #6043

Nicole Foss

Bennot,

Germany, Holland and Finland are not in nearly as good a shape as they and others think they are. They are also accidents waiting to happen. Ilargi’s recent posts on Holland, for instance, make this very clear. These currently richer countries are not expecting to find themselves in Spain’s position, and when they do, it will come as a huge shock, and blame will be everywhere. Europe is coming unglued, and is going to go down in a sea of recriminations. It’s nothing short of tragic that the European project should end this way – fanning the flames of the animosity it was meant to consign to history as the psychology of expansion gives way to the psychology of contraction.

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