Will the PIGS Blow Up Europe?
Among the mega-forces moving the tectonic plates and imperiling the nation-states of the world from above and below are these:
First, ethno-nationalism, which threatens nations with secession and break-up. We see it in the Uighurs of China, the Naga of India, the Baluch of Iran and Pakistan, the Kurds of Iran, Syria, Iraq and Turkey, the Chechens of the Russian Caucasus and the Walloons of Belgium.
Second, transnationalism. This is the project of global elites who seek to reduce nations to ethno-cultural enclaves in a new world order run by these same bloodless bureaucrats whose loyalty is neither to the land nor people whence they came.
Their work in progress, the European Union, however, is imperiled.
For the EU just took a great leap forward to force Europe's most indebted nations to surrender their economic independence or be expelled from the European Monetary Union. The PIGS—Portugal, Ireland, Italy, Greece and Spain—may rebel.
Indeed, we may see cascading rebellions across Europe recalling 1848, but with a different outcome.
What brought the EU to this day of reckoning is its decision to go for a trillion-dollar bailout of Greece, Portugal and Spain rather than let them default or restructure their debts. These nations are now being directed by the EU and International Monetary Fund to slash public spending and raise taxes, though all suffer from high unemployment, with Spain's at 20 percent.
If Berlin gets its way, these nations may also be forced to submit their budgets in advance to Brussels and accept EU-dictated limits on the deficits they will be permitted to run. This would entail a sweeping surrender of sovereignty, independence and economic freedom.
Moreover, as the pain of this "rescue" is to be borne by the debtors, while the beneficiaries are the French and German banks that hold tens of billions in PIG paper, this question arises: Why should Athens make Greeks suffer and risk political ruin at the polls, rather than default and let the banks and bondholders of Europe share in the pain?
Why not quit the EMU, default, repudiate the euro, restore the drachma and devalue? That would make Greek exports more competitive and make Greece a more desirable place in which to site one's next factory. And with its currency devalued, Greece would also become a more attractive destination for Western tourists.
But a Greek default is not the only threat to the EU.
The European Central Bank has been buying Greek debt from the banks both to relieve them of the risk of a default and to restore market confidence in Greek, Portuguese and Spanish bonds. Only when such confidence returns will investors buy new debt from the Club Med countries, all of which must issue new bonds to finance deficits and roll over maturing debt.
A problem, however, has also arisen here. As the ECB is buying up the debt of the PIGS, holders of Greek, Spanish and Portuguese bonds are unloading them, getting out of Club Med paper while the getting is good.
The ECB seems to be substituting itself for the banks as the chump to be left holding the bag when the defaults begin.
The plunging euro is a sure sign the markets are coming to see that the only way the bonds of indebted European nations are going to be paid off is with a huge infusion of euros, which may end that currency's status as a reliable store of value.
However, "if the euro fails, it is not only the currency that fails," says German Chancellor Angela Merkel. "Then Europe fails. The idea of European unity fails."
Especially enraged are the Germans. To show that they were good Europeans, they gave up their beloved mark. Now, in recent elections in North-Rhine Westphalia, the Christian Democratic Union of Merkel took a thrashing, falling 10 points below the CDU's 2005 vote, and losing the upper chamber of the German parliament.
Germans may be ready to shed the sackcloth and ashes they have worn for 65 years and start looking out for Deutschland uber alles.
Given the strains on the European Monetary Union and EU, neither of which enjoys the love or loyalty that people render to the countries of their birth, the great unraveling may be about to begin. Why, after all, should the indebted nations of Europe impose suffering upon their peoples to pay off old debts now held by distant banks?
How does imposing austerity on Portugal, Spain and Greece enable them to grow their way out of indebtedness? How does it help the EU grow if a large slice of the union is forced into austerity?
And why should Germans who pay themselves modest pensions and hold off retirement put their savings at risk to bail out the Club Med?
Many have predicted that economic nationalism would one day tear apart the European Union. The hour may be at hand.
COPYRIGHT 2010 CREATORS.COM
Entries(RSS)
From your lips (pen? keyboard?) to the Gods' Ears, that it be made so.
If the hour is at hand, let it come. Better sooner than later lest the suffering be greater. Let the European Union die.
This is just another stepping stone for the EU.
@ Comment 3 by Chris: "This is just another stepping stone for the EU."
True indeed. A stepping stone laid by the globalists to bring about the sort of crisis needed to usher in the creation of a EU central bank. After all, isn't all this "independence" of economic policy amongst the EU members at the center of this crisis? How much better it would be if we were united by more than just the appearance of our currency!
The people of Europe are being ignored in their concerns by their elitist leaders just as much as the people of America are ignored. But the EU is not going away. A new Roman Empire is emerging under the direction and control of Germany.
Now if only we could get rid of California, New York City and Washington DC so easily....
We Americans should watch this crisis and remember the words of Rahm Emmanuel: "Never let a good crisis go to waste."
There will be no fall of the EU. Rather, it will use this crisis moment as a tool to further consolidate its fiscal power over EU states via a new bureaucracy created to "Oversee" the massive EU bailout authorized last week. A EU central bank to be sure.
The EU constitution was signed in November 2009. On January 1, 2010, the European Union implemented its diplomatic service and appointed other officials. The revived Holy Roman Empire became official. For decades NATO has built its military might, armed in part by U.S. nuclear weapons stored around various NATO countries, who are authorized to use these nukes based on earlier agreements.
The EU is far from being a democratic constitution and it is domineered by Germany. Last week's bailout ruling by Germany's Supreme Court was a decision made in the dead of night on a Saturday, against the wishes of a general population. The United States could very well end up as the destitute satellite of a new German-led empire.
How smug the Nowegians must feel, silently looking on from 'outside the square', having had the good sense to reject by referendum joining the EU club of finger-pointing squabbling nations, the richer ones, on reflection, now ruefully in favour of the Groucho Marx approach to taking out club membership.
Norway retained its own currency (yes, so did Denmark but all other club rules apply), has $440 billion salted away in its national pension fund away courtesy of its unshared oil revenue and, oh yes, the highest standard of living in the world according to the Human Development Index.
Some of the respondents fail to see the logic of their own words. I don't know about Germany reasserting control of the Holy Roman Empire, but if it does, it will not be the Germans, who are already yoked in, but some "German" elite which probably has equal smatterings of English, Dutch, French nationals in it.
In addition all currencies based on debt, including our Federal Reserve Notes, are inherently unstable. They are unstable because while they issue the units that must be repaid with interest they do not issue and spend into the economy the interest itself, and thus they can never get back into even. Add in a little waste, fraud and greed, and the economy is always behind the 8 ball.
There are so many errors of fact and judgement, both in the article and in the comments, that it would take a long essay to sort them all out.
Instead I'll leave you all with a quote that seems as true today as it was when written nearly two centuries ago:
Can anybody guess who wrote that? (Hint; it wasn't some "European-style" socialist.)
Tocqueville was not right about everything, but in this instance he was "right on the money." But Sempronius should offer more details.
@ #10 Sempronius
"There are so many errors of fact and judgement, both in the article and in the comments, that it would take a long essay to sort them all out."
How about a short essay sorting some of them out?
"Can anybody guess who wrote that?"
I was going to guess Twain. I was wrong.
Messrs Fleming and Toddard, I will attempt a defense of my position by the weekend at the latest. Understand that I can't type, and longish comments are too much for my two clumsy index fingers.
I thought I could get away with a few laconic statements, but I see that it's a tough crowd here at Chronicles. I suppose I can no longer fancy myself a Spartan.
Tocqueville is the correct answer.TJF gets a star next to his name. Class dismissed.
No, they won't blow up Europe, but they will blow up European Union. Hekla can blow up Iceland and TNT can blow up almost anybody.
Europe is not European Union.
Briefly then. The Greek "crisis" is phony. Wall Street rating agencies started a propaganda campaign (furthered by the financial media) to unjustifiably call into question Greece's financial integrity. This led to lower credit ratings, higher interest on Greek bonds and consequently a Greek budget crisis. This in turn occasioned a "flight to safety" away from the euro towards the dollar and the pound sterling. Exactly as planned.
The PIIGS are not particularly improvident, nor insolvent. They're more financially sound than many other countries which haven't suffered any similar financial diktat or rumor mongering.
The euro is the only alternative reserve currency that can challenge the dollar's supremacy. New York is quite well aware of this. So they attempted to sabotage the euro.
In short, if you believe in Greek crises and "PIIGS" you may as well believe in "weapons of mass destruction," Al Qaeda links to Sadaam Husein and Iranian nuclear threats to the entire world.
A few other points:
There is nothing remotely wrong with a "Roman Empire."
There is nothing particularly egregious about the Germans at the head of Europe.
German power within Europe has been grossly exaggerated.
American "Catholics" should know that European union lifted Catholic Spain, Portugal and Ireland out of abject poverty.
There is nothing particularly "conservative" about Democracy.
I could go on and on.
All'epoca delle Signorie i Comuni devono trasformarsi. - G. Adinolfi
I believe Greek debt is at around 140% of GDP -- this is not a made up number by Wall Street conspirators and it is unsustainable (obviously). As in every other single debt crisis, you can keep borrowing until lenders suddenly decide to stop lending (which no one ever knows when will occur, only that it will, or why it happens at a particular time). Then, the party's over.
Mr. Oliver, ask yourself this: Where do these "lenders" get all their money? Why (how) is everyone broke, and they always seem to have so much cash?
Why were Greek bond ratings downgraded so suddenly (and so drastically); when only a short time ago, with a similar debt ratio, everything was OK?
Why haven't nations with even higher debt ratios of 140% of GDP (the actual number for Greece is 119%) suffered a similar fate?
Sempronius, high fiscal deficits tend to not have as bad an effect when the given country is in a boom stage for its commercial activities.
For these reasons, the US under the Kennedy government and the Reagan government saw enormous deficits coupled with tax cuts still being offset by the increase in tax revenues for the government across future years.
Normally, when you cut taxes, you allow an increase in re-investment of today's income to increase future incomes. But in the case of Greece, taxes were already as high as it is (they go up to 40%). Think of it this way: (yes, this example is silly) a feudal warlord who collects grains from his subjects decides to relieve them for once. He borrows from lenders to finance his extravagant decadent lifestyles for today. By relieving them today, he allows his subjects some room to fatten up, so that he can collect more grains from their land in the future when better seasons come. But when he bleeds his subjects dry and still finances his extravagant living heavily, he will never get enough grains from his subjects in the future.
Now, Japan is a prospering nation. It has an even higher deficit, but unlike Greece, it has large electronics and automobile corporations selling to the world. But even Japan has entered heavy stagnation - it has not grown as fast as western nations for two decades now.
Anyway, we must not kid ourselves. Many American Presidents like Thomas Jefferson and Andrew Jackson took the time to learn monetary theory. They grasped fundamentals of economics and investment. And they knew deficits were bad. That's why they paid them off. Governments in deep debt have collapsed in the past, and sovereign defaults have happened as recently as the last decade. Poorer nations like Indonesia have been burnt down by their deficits; rich nations are affected a little less. And Greece is not among the rich nations of the world.
Most lenders are ordinary people. Not large financial institutions. Ordinary people put savings in banks. Banks deposit many of those savings with the central bank. The central bank buys bonds with those savings. (Often, the central bank will buy the bonds directly, and will simply increase the funds in government accounts, inflating the currency.) One way or another, it's ordinary people who are the creditors to the government, either by taxes or their savings in banks. And it is they who bear the burden of large deficits, for it's their money being used or inflated.