Thursday, November 10, 2011

End of the euro, Thursday edition

Former German Foreign Minister Joschka Fischer tells Die Zeit: "Den Kontinent Europa wird es auch ohne den Euro geben, aber als politisch-kulturelles Projekt ist es dann tot." (The continent of Europe will be here even if the euro is not, but [Europe] as a political-cultural project is then dead." (Euro-Krise: Joschka Fischer fordert "Avantgarde" der 17 Eurostaaten 09.11.2011)

And he harshes on Angela Merkel's government: "Wir haben die schlechteste Regierung seit 1949, aber das Land ist stark genug, auch damit zurechtzukommen." ("We have the worst government since 1949, but the country is strong enough get along even with that.") 1949 was the year the Federal Republic (West Germany) started functioning as an independent country. I agree with that. Merkel and her partner in incompentence Nicolas Sarkozy have a pathetic record.

There are conflicting reports indicating that senior EU leaders are urgently discussing contingency plans for something along the lines of what Fischer is saying. One would think that they would be making more concrete plans for an immediate exit of Greece or Italy from the eurozone. But after what we've seen from Nick and Angie (Sarkozy and Merkel) these last three years, it wouldn't surprise me if they were just fumbling around on it. It's understandable that officials would be leery of starting rumors or leaking plans having to do with such matters because they could provoke a run on banks or more problems in the bond market. Paolo Biondi and Lefteris Papadimas report for Reuters in Italy eyes unity cabinet as EU dithers on crisis 11/10/2011:

Merkel, French officials and the EU's executive Commission all tried to quash talk of a possible shrinking of the euro area, although they raised the possibility last week that Greece might leave the single currency.

EU sources told Reuters that French and German officials had held informal discussions on a two-speed Europe with a more tightly integrated and possibly smaller euro zone and a looser outer circle.

The discussions among senior policymakers, still in the realms of the theoretical, have focused on how to protect the euro zone from breaking up via tighter common policies which some members may by unable or unwilling to live with.

European Commission President Jose Manuel Barroso issued a stark warning of the dangers of a split in the European Union.

"There cannot be peace and prosperity in the North or in the West of Europe, if there is no peace and prosperity in the South or in the East," Barroso said in a speech in Berlin.

Merkel called on Wednesday for changes in EU treaties after French President Nicolas Sarkozy advocated a two-speed Europe in which euro zone countries accelerate and deepen integration while an expanding group outside the currency bloc stays more loosely connected.
The PBS Newshour featured this hair-raising segment on the European debt crisis Wednesday evening (11/09/2011), Italy's Debt Dilemma: Too Big to Fail and Too Big to Rescue?:

How does the reliably stodgy Newshour report the potential severity of the problem? Roben Farzad of Bloomberg Business Week says in this segment, talking about a country leaving the eurozone, "I mean, if we thought we had a problem with AIG and Lehman Brothers and that chain effect three years ago, it's on orders of magnitude larger than that. So we almost don't want to consider the possibility."

Italian reporter Mario Calvo-Platero seems to echo the neoliberal line about the need for so-called structural reforms, a buzzword that means austerity economics in this context and generally means cutting back public services, union rights and regulations of business, especially financial regulation.

The financial lobbies would love to use the euro crisis as "disaster capitalism," using it as an excuse to ram through "reforms" favorable to the banksters but damaging to the people and to democracy. But the crisis is nevertheless all too real.

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