German euro founder calls for ‘catastrophic’ currency to be broken up

Oskar Lafontaine, the German finance minister who launched the euro, has called
for a break-up of the single currency to let southern Europe recover, warning
that the current course is “leading to disaster”.

“The economic situation is worsening from month to month, and unemployment has reached a level that puts democratic structures ever more in doubt,” he said.

“The Germans have not yet realised that southern Europe, including France, will be forced by their current misery to fight back against German hegemony sooner or later,” he said, blaming much of the crisis on Germany’s wage squeeze to gain export share. Continue reading

All or Nothing

Here is one article that hits the mark on what’s truly transpiring in Europe. The talk of Eurobonds also keeps popping up.

BERLIN (Own report) – Just days before the opening of the EU crisis summit at the end of the week, the German government is increasing its pressure on the crisis ridden Euro countries to surrender their national sovereignty. The German finance minister rudely rejected Italy’s demands to receive the badly needed help, without having to concede its sovereignty. Germany recently turned down similar Spanish efforts. The measures are part of a comprehensive program to consolidate German hegemony over the continent, under the motto of converting the “European integration” into a state-like Euro zone structure, based on the right of interference in national budgets of the economically weaker countries. Around the globe, the protest against Berlin’s austerity dictate is growing, because the German government’s power ploys are driving not only European crisis countries into impoverishment but are also threatening to critically damage the global economy. A failure of the German va-banque game could provoke even a serious setback for the German economy.

Disempowerment of the Periphery

The European integration plans, just recently imposed on the EU primarily by Berlin, sheds light on why the German government would risk its isolation. The realization of these plans would transform the Euro zone into a sort of state structure under German hegemony, shattering the very foundations of national sovereignty, at least, of the weaker Euro zone countries. According to these plans, within the future Euro zone state, the member countries will no longer be in a position to independently take out credit. All expenditures, not covered by autonomous revenue, must be requested from a central EU body. At EU level, this would “then be decided in common, which country will be allowed how much in new debts,” it was reported.[7] The “approval process” is to be supervised by representatives of the individual parliaments. In exchange, common European loans, the so-called Euro Bonds, will be issued – to finance the approved debts at the Euro zone level. Until now, Berlin has rejected the idea of Euro Bonds, because they would lead to increased interests for German state credits. The new considerations, being propagated by various media organs, correspond to proposals made public in late May by the German ECB presidium member, Jörg Asmussen. The US-American “Wall Street Journal” recently picked up this theme. It writes that the new European “steps toward integration” are part of a “shift” in German crisis policy. Berlin is sending “strong signals” that it would eventually be willing to “lift its objections to ideas such as common Euro-zone bonds” if other European governments were to “agree to transfer further powers to Europe.”[8] In the “NY Times” the economist Jacob Kirkegaard explains that “if German taxpayers are going to be liable for Italian debt, then they have to have some democratic say in how Italy runs its affairs and spends German money.”[9] Berlin is aware that a renunciation of the disastrous austerity policy is economically necessary, but wants to do so only under complete German control. By way of the bureaucracy in Brussels, the German government is seeking nothing less than the direct supervision of the crisis countries’ kernel of national sovereignty – their budget planning.

The Transfer Union

In fact, Berlin could use this means to consolidate its hegemony over Europe – imposed under the constraints of its economic pauperization strategy. Currently, Germany, due to its low budget deficits, would hardly be affected by these imposed limitations. It could use its enormously bloated current account surplus, accumulated over the past few years, to rehabilitate its own budget at the expense of the Euro zone. The extremely accelerated, highly aggressive export orientation of the Federal Republic of Germany was made possible by the introduction of the Euro, which removed the Euro countries’ possibility of devaluating their currency to defend their economies against German competition. The infamous German Hartz – IV labor laws, introduced by the Social Democrat/Green coalition government, was an exports-favoring intensification – sinking German wage levels, in comparison to those of other Euro countries. The German industry’s export offensive – which, since the introduction of the Euro, has accumulated a current account surplus of approx. 800 billion Euros within the Euro zone [10] – has decisively contributed to the debt crisis inside the Euro zone. The German export industry, profiting from the precarious low-wage sector, has accumulated the current account surplus. This naturally corresponds to the deficits, particularly in the southern Euro zone countries, some of which have entered a process of deindustrialization.

Full article: All or Nothing (German Foreign Policy)

Germany prepares for ‘inevitable’ Greek crash

The German finance ministry is pushing for Greece to declare itself bankrupt and to agree to a ”haircut” on the bulk of its debts held by banks, a move that would be classed as a default by financial markets.

Euro zone finance ministers meet today to approve the next tranche of loans from the EU and the International Monetary Fund, designed to stave off national bankruptcy while the new Greek government puts the country’s finances in order. But the severe austerity measures being demanded have caused such fury in Greece, and the cuts required are so deep, that German Finance Minister Wolfgang Schauble does not believe that any government would be able to implement them.

Full article: Germany prepares for ‘inevitable’ Greek crash (Canberra Times)