Friday, December 02, 2011

End of the euro, Friday edition: sailing for the iceberg

Angie makes her suggestions for saving the euro:

German Chancellor Angela Merkel spoke to the German Bundestag, the lower House of Parliament on Friday about her solutions for the euro crisis, giving her position leading up to next week's EU summit, which is shaping up to be something like a wake for the European Union in advance of its formal demise.

Three things are needed to save the euro, if such a thing is still even possible: the European Central Bank (ECB) has to be the buyer of last resort for eurozone countries' sovereign debt; eurobonds, based ont he combined credit-worthiness of the eurozone as a whole; and, a fiscal union in the eurozone that would also function as a transfer union. The "transfer union" concept refers to a function like we have in the US, where the federal tax structure and national budget systematically transfers wealth from the wealthier states like California to the less wealthy states like Mississippi.

In her speech Friday, Angie rejected the first two and promoted a version of the third that would only make matters much worse: constitutionally imposed debt limits (debt brakes, the Germans call it) and authority ceded to the EU Commission (read: Germany) to impose sanctions on countries that fail to meet the EU's preferred austerity measures. Austerity economics has demonstrably failed in the eurozone, as Paul Krugman recounts in his excellent summary of the current crisis, Killing the Euro New York Times 12/01/2011.


With European leadership like today's, we can all be happy there are no Austrian archdukes left for anyone to assassinate. Awesome, just awesome.

Jesús Ceberio writes about Angie's euro-and-iron policies in A bordo del Titánic (Aboard the Titanic) El País 22.11.2011:

La canciller alemana solo está dispuesta a patrocinar junto a Sarkozy, en la próxima cumbre europea del 9 de diciembre, una reforma de los tratados que profundice la unión fiscal de la eurozona, esto es, la creación de un órgano con capacidad de supervisar previamente los presupuestos nacionales e imponer sanciones a los infractores. Las democracias modernas se edificaron sobre la máxima anglosajona de que :"sin representación no hay impuestos". Será interesante verificar cómo se cumple este principio en la propuesta germano-francesa. Cualquier fórmula que consagre una burocracia no sometida a control parlamentario sería un intolerable retroceso democrático.

[The German Chancellor is only prepared to sponsor, together with {French President Nicolas} Sarkozy in the next European summit of December 9, a reform of the {EU} treaties that would deepen the fiscal union of the eurozone, that is, the creation of a organ with the authority for prior supervision of the national budgets and impose sanctions on those who commit infractions. Modern democracies were built on the Anglo-Saxon maxim, "no taxation without representation". It will be interesting to see how the German-French proposal complies with this proposition. Any formula that sanctifies a bureacracy not subject to parliamentary control would be an intolerable regression of democracy. {my emphasis}]
The newly-elected Prime Minister of Spain, Mariano Rajoy of the conservative Partido Popular (PP), currently waiting to assume his new office, is eager to show his subservience to Berlin, promising "a cumplir con el objetivo del déficit por encima de todo" (to comply with the deficit target above everything), as the Maria Dolores de Cospedal, second in the hierarchy of the PP, declared. (Rajoy ya pide ayuda a Merkel: compras del BCE y España en el 'núcleo duro' El País 01.12.2011)

That would be the deficit target demanded by Merkel and her junior partner in the destruction of the European Union, French President Nicolas Sarkozy. Seeing how the austerity measures have visibly and disastrously failed to solve the debt problem in Greece, Ireland, Portugal and Spain so far, Angie wants the new Spanish government to double-down on austerity policies. Rajoy is only too happy to comply. He at least has more democratic legitimacy for his subservience to Berlin than the debt-collector governments of Greece and Italy. He campaigned on austerity and the PP won a clear majority in Parliament. The Spanish voters can look forward to getting what they voted for. And, yes, it does promise to be worse than the disastrous austerity measures foolishly adopted by the outgoing Socialist government.

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