– Euro is one recession away from implosion – David McWilliams
– Mismanagement of euro “both laughable and terrifying”
– “When economic negotiations stop making economic sense, you should begin to question the motives of the EU”
– Germany is out of control
– Successful British exit will be model for other countries
– Euro membership is now conditional
– “Countries that don’t play ball with Germany will see their banking system used against their democratically elected politicians”
– Investors and savers need “PLAN B”
McWilliams, who is among the best economics commentators from the only Anglophone nation in the euro – Ireland, warns that we only have a few months to plan an alternative to the disastrous consequences on peripheral nations of what he sees as German hegemony. Continue reading
The way that Greece has been manhandled this past week is exposing a new Germany.
Over the past week, we have seen the clearest, most naked display of German aggression since the end of World War ii. Germany, of course, has been ruling the eurozone for years. Der Speigel even called Germany the new “Fourth Reich” earlier this year. But for the most part, Germany has concealed its dominance behind a fig leaf of consensus.
That ended this week.
Where does Germany stand in Europe? And are its downtrodden southern neighbours justified in comparing its current dominance to the dark days of Nazi rule? These are the questions that a group of journalists attempt to answer in a special enquiry for German weekly Der Spiegel. They draw from Germany’s troubled past to argue that Europe’s “reluctant leader” paradoxically considers itself both too big and too small to fulfil its current role:
The eurozone is clearly ruled by Germany, though Berlin is not unchallenged. It does, however, have a significant say in the fates of millions of people from other countries. Such power creates a significant amount of responsibility, but the [German] government and other policymakers nevertheless sometimes behave as though they were leading a small country.
Modern Germany is a new reich, at least in an economic sense, Der Spiegel concluded in the cover article of its March 21 issue.
With a circulation of over 1 million, Der Spiegel is one of Germany’s most popular and well-respected newsmagazines. An English version of the article is available on its website, and is worth reading in full.
“People have even begun talking about the ‘Fourth Reich,’ a reference to the Third Reich of Adolf Hitler,” states the article’s introduction. “That may sound absurd given that today’s Germany is a successful democracy without a trace of national-socialism—and that no one would actually associate Merkel with Nazism. But further reflection on the word ‘reich,’ or empire, may not be entirely out of place. The term refers to a dominion, with a central power exerting control over many different peoples. According to this definition, would it be wrong to speak of a German Reich in the economic realm?” Continue reading
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
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. 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.” 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.” 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  – 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)