News & Analysis
Death Spiral of EU Crisis?
Crisis-talk in Brussels is hardly new. What's different today is the palpable sense of failure and confusion communicated, even by the most fervent advocates of the EU. It is easy to dismiss this reaction as merely a symptom of the bitter conflict and rivalry unleashed by the crisis of the Eurozone, with Greece, Ireland and Portugal having to be bailed out with huge injections of cash to keep their governments solvent. However, the current problems confronting the integrity of the EU are not confined to the domain of economics; the organisation is also threatened by a political and cultural crisis. – Spiked
Dominant Social Theme: Just give us a little more time. Say, can we ban these nasty bond markets? Why do they exist anyway?
Free-Market Analysis: Frank Furedi of the alternative web newspaper Spiked has written an insightful article on the breakdown of confidence among the EU's chattering classes. He has the idea that Eurocrats are so out of touch with average Europeans that they have run out of ideas of how to protect the union from its onrushing Armageddon. His larger point, though he doesn't use our vocabulary, is that a fundamental dominant social theme (internationalism forever) is beginning to crumble.
This is a cause for happiness in our view. Let the EU crumble and the Anglo-American elites will have received a significant setback. Combine a failure of the EU with failure in Afghanistan (see other story, this issue) and it becomes clear that Money Power is less dominant in this century than in the last. Of course, we have been arguing this possibility for years.
This group of authoritarian socialists IS out of touch. They would disdainfully require countries to vote again and again when the votes were not in the best interest of the EU Leviathan. They would gladly hold whole populations hostage for the sins of a handful of elites, while ignoring the EU's own fiscal lapses, ones that are so bad an auditor has refused to sign off on EU finances for a decade or more.
Lately, there seems to have been a pullback in EU elite ambitions, a cessation of confidence in the idea that Eurocrats could slam their collective, Orwellian boot endlessly in the face of a resentful populace. Talk of massive abrogation of civil rights has seemingly been muted for the moment. Putting all EU citizens into one large one database in order to spy on them more effectively has seemingly been shelved for the time being. Building an EU Army to help NATO with its job of oppression around the world has quieted.
Generally, we're getting the sense that the Eurocrats are beginning to believe that the financial crisis is a bridge too far. Gone are the proclamations of confidence issuing from the lips of Sarkozy, Merkel and Trichet. The Camp of Confidence seems to have fallen mute. Furedi captures it well.
The new buzzword in Brussels: 'Crisis' The EU is beset with problems, but it is so cut off from the electorate that it lacks the popular legitimacy to solve them. During a recent visit to Brussels, I was struck by the uninhibited use of the word 'crisis' by people who closely watch or inhabit the institutions of the European Union.
With the Greek economy in a state of disintegration, European leaders know that there is no alternative but to restructure Greece's debt. They may use the euphemism of 're-profiling debt' to avoid acknowledging the scale of the problem, but the spectre of insolvent nations haunts Europe. Just a few weeks after pouring billions of euros into bailing out Portugal, it is evident that the medicine is not working and that the Eurozone is in big trouble. Inevitably, there is talk of reorganising Europe's monetary union as more and more people have lost faith in the existing bailout strategy.
Opposition to this strategy has led to the growth of euroscepticism throughout the more prosperous regions of Europe. A recent opinion poll in Germany showed that 30 per cent of the respondents wanted an 'independent Germany', without the euro. That is why last week, the German chancellor, Angela Merkel, stated that people in countries like Greece, Portugal and Spain should not have more holidays, work less or retire earlier than Germans. One Portuguese journalist described this gesture as 'feeding the populist monster that is growing in the Europe of the euro'. But this monster is not about to disappear.
Furedi makes other interesting points. The anti-EU True Finn party has emerged as Finland's third-largest and is actually within a whisper of being Finland's largest. This is no accident, he writes, and shows how the EU's woes are mutating.
There are other issues, just as serious as the financial crisis, though they have received less attention. The biggest challenge, curiously, may be the tens of thousands of North African and Libyan refugees showing up on the doorstep of Italy. Prime minister Silvio Berlusconi has called this refugee wave a 'human tsunami," and has indicated that Italy is not about to foot the bill for an endless surge of homeless Tunisians.
Berlusconi wants a fundamental tenet of the EU done away with for the moment – the Schengen border-free travel agreement. Freedom of movement, Furedi points out, is one of the few areas where the EU has delivered something entirely positive, and now it is under attack. It is not just the Italians either; the Danish government has indicated it will regenerate permanent border controls. The EU, Furedi notes, has responded by announcing it will spend £84million "to explain European policy and for 'better connecting with citizens'."
The article saves the best for last. Furedi explains that the EU has been effective at overcoming resistance to its policies because it was deliberately set up in such a way that its top Eurocrats did not have to respond to public opinion. Many were appointed rather than elected; at the very, top votes were not necessary to make policy, which could simply be handed down.
Of course, this fundamental anti-democratic state of affairs has kept various EU opponents in something of a subdued frenzy (and been responsible for making many powerful EU enemies) but authoritarianism admittedly has its merits. "The EU is able to adopt policies that would often prove contentious and difficult to justify in a more open, national parliamentary setting," Furedi points out.
Furedi also make the clever point that lacking legitimacy, the EU substituted vast PR programs. He is absolutely right about this. We noted this occurrence without fully understanding its import. But the EU's use of PR is virtually unprecedented within a modern democratic setting. Not only is it unusual, but as Furedi notes, it has produced an environment where the EU's top people have no legitimacy and no political tools to wield when they need them most.
He writes, "Today decisions affecting the lives of hundreds of millions of people cannot be insulated from the anger and hostility of the public." This is a profound point. It was always pointed out by the EU's enemies that its lack of accountability was its most dangerous element. But ironically, this very lack of accountability means that the Eurocrats never built the communication channels and relationships that could be used in a time of crisis.
The European Central Bank just yesterday indicated that any kind of debt restructuring was out of the question for Greece, presumably for any of the PIGS. We have noted in the past the exceptional European "rigor" on this issue. The Greek socialist leadership promptly and cravenly agreed with the ECB and came out of with a statement vowing to inflict on Greeks every part of the unfair, unwise and unworkable austerity program that the IMF has devised for the Greeks –and for Portugal and Ireland as well. In fact, they really have no idea what to do. The politicians have begun to bicker with the bankers and it is wonderful to watch.
Conclusion: Spain, convulsed by protests, may be next on the austerity list. If Spain goes, so goes the EU – and we will gladly wave it goodbye. One more dreadful, authoritarian celebration to pile on the junk heap. That it will likely mark a significant setback to the Anglosphere elite's efforts at building world government would only make it more satisfying.
Posted by rossbcan on 05/24/11 08:27 AM
FF: "it is so cut off from the electorate that it lacks the popular legitimacy to solve them"
this is an insurmountable natural flaw of hierarchies. The bigger they are the faster and harder they must fall, by the natural laws of information flow / corruption through imperfect chains of command:
Click to view link
Posted by Mountainview on 05/24/11 08:48 AM
The newest plan is to strip Greece of the crown jewels or the last remaining assets in the hand of the state, which produce some positive cash flow. With these assets stripped of the chance of Greece to serve its remeining debt falls even lower.
Conclusion: The whole thing is only an extension of the pretend and extend game. The bankers win some time but the set back will be worse.
Politician as usual have no creative idea, think only about the next election and will provoke street protests. Like Marie Antoinette the will soon propose "Let them eat cake?" when bread starts to be missing! You know the end of Marie Antoinette!
Posted by dotti on 05/24/11 09:08 AM
My first smile of the day: "The politicians have begun to bicker with the bankers and it is wonderful to watch."
Posted by Leonardo Pisano (www.leonardopisano.com) on 05/24/11 10:34 AM
I read persistently that Greece should sell a couple of islands to Germany. Don't know if that includes the island inhabitants or just the land. A far better option is of course introducing a Sound Tax as I have posted on my soapbox Click to view link (tongue-in-cheek).
Posted by Don on 05/24/11 12:04 PM
"lacking legitimacy, the EU substituted vast PR programs."
PE 20th century dreamtime came with a mass media reality machine. PE puppets simply composed a press release and the mass media machine made it real.
Posted by Metanoia on 05/24/11 12:19 PM
So the lack of legitimacy that built the edifice will be the lack of legitimacy that tears it down...
How sweetly ironic.
A friend in Brussels, whilst helping with the arrangement of deckchairs, told me the panic-stricken buzzword is 'six weeks'
Methinks it will--like a bad smell--stick around quite a bit longer, allowing us more time to enjoy the sound of the death rattle...
The boys (and girls) who cried wolf.
Engineering a crisis that has now become real.
Posted by Don on 05/24/11 12:25 PM
"Engineering a crisis that has now become real."
It can happen when the wheels come off of the old mass media reality machine. The recursive poetry of it all moves me to gails of laughter.
Posted by Nightcrawler on 05/24/11 01:03 PM
A war, a really big war, will divert attention and bring the populace back to the loving devotion of thier benevolent masters.
Posted by alexsemen on 05/24/11 02:13 PM
The problem is that Marrie -Antoinette has never said such inept and moron words.
This words are the simple invention of those who provoked and manipulated the masses. As it is today , but today the people is guilty and must pay !
Posted by alexsemen on 05/24/11 02:42 PM
Euro and EU is on Viagra ! A very strange and unnatural love affaire !
Good luck !
But the Frankenstein's kid is alive ! Be aware !
Posted by Jean on 05/24/11 04:18 PM
I recently posted this story on my blog, and I've been asking people I know what they think of it. Could it be true? Strauss-Kahn and the End of Bailouts [I would suggest if at all possible you have a look at the video!]
Click to view link
The premise is that someone has made the decision here in the US that there will be no more bailouts, and to insure this, DSK was arrested. This would imply that there is a huge shift in Obama's thinking . . . and if so, what is going on?
Reply from The Daily Bell
Thanks for the link and feedback. But one can read all sorts of motives into DSK's arrest. The easiest thing to do is wait 3-6 months and then review what has actually occurred.
Posted by Danny B on 05/24/11 08:48 PM
There is another fundamental that must be taken into account. Ignore it at your peril. [Note to the EMU]. Herman Achille Van Rompuy can order governments to do this and that. Banks can do this and that. Proclamations can be proclaimed. Capital controls can be implemented. But, in the end, if investors want to desert a market,,,, they will. Imagine what would happen if investors were told that the bond market was "buy only",, no sell.
The politicians can nip at the edges but, if capital wants to flee, it will.
NWO would have us in some command economy utopia. Capital is too independent and powerful to go along with that idea.
The GOV / Bankers are terrified of ANY Greek default. THAT would "kick-in" the "payout" on derivatives and CDSs and CDOs. The banks can NOT make good on the enormous amounts required to pay off the swaps.
When the derivatives failed on U.S. MBSs, the zombie banks mutually-canceled about $500 trillion in payout-exposure. There is still about $ 520 trillion of derivatives outstanding. The U.S banks incestuously agree that the MBSs are still worth face-value. They could not possibly survive a full accounting and payout.
IF the counterparty to a failed MBS or CDS or CDO is not an entity that has reciprocal exposure that could be mutually canceled, this counterparty is required to satisfy the swap at face value.
The contract language for the various instruments does not allow for a soft restructuring. It clearly demands payout in case of a default. GOV is trying to fix the situation with 'water". The counter-parties demand "blood". Nobody in the EMU or ECB is in any kind of a legal position to tell the counter parties that they can not collect.
The bond holders aren't in any mood to forfeit their investment. They bought "insurance" and they want a payout,,, either from the seller or the insurer. If the "insurer" of the counter-party is forced to pay, this will kick off a chain reaction of defaults around the world. Can Brussels cancel the contract language? Can the insurers make the enormous payments? Can the PE put Humpty Dumpty back together again?
If London and New York represent "crime central" for the Anglo-American elite, there is a DISTINCT survival meme that is circulating for the A.A. elite.
Click to view link
It appears that the A.A. elites are willing to trash the Euro to prop up the dollar. This would be a definite retrenchment of "one-world" currency. One could infer that British Imperialism and it's bastard progeny, Pox Americana, find it necessary to execute a major pullback in the face of major miscalculations.
Reply from The Daily Bell
An excellent post, full of insights. Thanks so much.
Posted by sparky on 05/24/11 10:52 PM
This is quite encouraging to see from a U.S. perspective
The following in quotations are direct copy and pastes from the attached Daily Bell:
"The anti-EU True Finn party has emerged as Finland's third-largest and is actually within a whisper of being Finland's largest. This is no accident, he writes, and shows how the EU's woes are mutating".
This is quite encouraging considering the worst of the economic dislocations have not even hit Europe or the U.S. yet. It does not take alot of imaginaton to see how much more erosion will take place to the Dominant and Sub-dominant social themes of our "Friends" from the City of London when they do hit with full force. I begin to wonder how quickly Americans might be willing to revisit obeying the Constitution when the easily forseable currency crisis and the ensuing devaluation of their life savings steals a large portion of what used to be their wealth.
" It is not just the Italians either; the Danish government has indicated it will regenerate permanent border controls".
Another great development! European Nations actually beginning to act as autonomus sovereign nations once again. Of course one of the requirements of a sovereign nation is it's own clearly defined and maintained borders.
As stated at the beginning of my comments this is quite encouraging. Since the "European Union" was the crown jewel of these P.E.'s and if the center of their efforts are crumbling it would appear as though they will have little hope of advancing this agenda any further on the Click to view linkke it was at say the end of the Roman Empire!!
Posted by Bischoff on 05/25/11 10:31 AM
From an historical perspective alone, the arrogance of the political elite to "always know better" what is good for everybody is much more entranched in Europe than in America.
The political elite in America is created by the ivy league colleges where the future elites receive their pedigree, learn to be arrogant and make the necessary connections to obtain influental jobs after graduation. With this background, they are then qualified to tell everybody "what is good" for them.
In America the political elite is installed by a sycophant media. The media in Europe does not quite enjoy that kind of power. Therefore, if the outcome of any plebecite in Europe differs with the prescriptions of the political elites there, such plebecite is simply repeated until a suitable outcome is reached.
In America as in Europe, the "superior wisdom" claimed by the political elite is a sham. To claim "superior wisdom" by an individual is an offense against Natural Law.
Given certain requisites, the "superior wisdom" always resides with the "crowd". Yet, in Europe the crowd is not listened to and asked again and again to make the "right" decision, while in America the crowd is dumbed down and then manipulated by a sycophant media to produce the desired outcome in an election.
Can anybody doubt that the internet and the social media with its power to inform will spell the disintegration of the idea that "superior wisdom" is only possessed by individuals of the political elites...???
Posted by rossbcan on 05/25/11 11:29 AM
"Can anybody doubt that the internet and the social media with its power to inform will spell the disintegration of the idea that "superior wisdom" is only possessed by individuals of the political elites...???"
To make this argument, you must KNOW what "wisdom" actually IS:
Click to view link
IMHO, the "unseen hand" of the "wisdom" of the market is because "choosers" have "boots on the ground" and, people, in aggregate are able to consider more facts, under diverse conditions, as opposed to hierarchical choosers who are trapped in their environmental position in some environment which has been psychologically designed such that the choosers will consider the environmental facts that they are allowed to see constrained by "rules" which limit their information available and thus, choices.
Sorry, my English translator has been subverted by elites:)
Posted by Bischoff on 05/25/11 01:34 PM
We just have to find another English translator. Anybody out there who can translate the comment...???