Wednesday, December 07, 2011

End of the euro, Wednesday edition: Angie tells the satellite states to get with the program

Angie is miffed that inferior people and lesser nations are questioning her demands that they adopt her Ordnungsökonomik and like it!

Philipp Wittrock reports for Spiegel Online, Vor Krisengipfel.Aufstand der Euro-Nörgler 07/12.2011 on what a "hochrangige, deutsche Regierungsvertreter" (senior German government deputy) had to say on behalf of Angie's government on the Little People who are questioning her commands. See also Carsten Volkery and Philipp Wittrock, Das deutsch-französische Diktat Spiegel Online 06/12/2011.

Princess Angie von Merkel doesn't want to hear grumbling from Britain. Nor from those punks that call themselves EU officials (EU Council President Herman Van Rompuy, EU Commission chieft José Manuel Barroso, euro group head Jean-Claude Juncker). Certainly not from those Czechs; hell, didn't they learn their lesson in 1938?

The silly Hungarians are even muttering about holding a referendum. And we know Angie doesn't like referendums.

There's a German saying that, "Ordnung ist das halbe Leben." (Order is half of life.) I don't think Angie is big on the "half" part. She expects her satellite states to click their heels and salute when she gives them an order.

As nasty as Merkel is being, it's also important to understand that Britain's behavior has also been irresponsible. Conservative British Prime Minister David Cameron doesn't make any bones about the fact that his priority in this crisis is giving the banksters of London maximize freedom to do what they want. (Nicholas Watt and Ian Traynor, David Cameron threatens veto if EU treaty fails to protect City of London Guardian 12/06/2011)

This continues British half-heartedness in supporting the "European project," i.e., the building of the European Union. British Conservatives have always been divided on their support for the EU, much more so than conservatives in Germany and France, where Big Capital was generally more united in their desire for the commercial benefits of EU participation.

Britain, generally being a faithful follower of the US in foreign affairs, favored the American preference for the EU under both the Clinton and Bush II Administrations. Which was for a weaker union, focused more on economic issues than on political unity, and for fast expansion of the EU to former Soviet bloc countries.

Britain's decision to stay out of the euro zone may look prescient at the moment. But that decision had less to do with economic wisdom than it did with British leaders' half-hearted commitment to the EU. So Britain has a major share in the leadership failure that threatens to end the EU project, as well as the euro currency. Cameron and his Conservatives are just as married to austerity economics as Angie and the European banksters. So his advice and support in the current crisis hasn't offered any real solutions or distracted Merkel and Sarkozy from their disastrous course.

Robert Kuttner has a good summary of European austerity economics in Europe's Deal: So Who Wins? American Prospect Online 12/07/2011:

... the real European economy is condemned to many years of austerity. That, in turn, means prolonged high unemployment, further weakening the bargaining power of wage earners vis-à-vis corporate capital. Europe’s economic elites also get new leverage to shrink Europe’s welfare state. Notably missing from the deal is any improvement in the regulation of finance, whose abuses caused the crisis in the first place.

In fact, if all this sounds vaguely familiar, it is exactly the grand bargain that has been promoted for two decades by the likes of Peter G. Peterson, Robert Rubin, the members of the Bowles-Simpson Committee, and kindred millionaires who want an enforceable hammer to compel a balanced budget and shrink social spending. The only difference is that on the other side of the Atlantic, the euro crisis gave elites the leverage to pull off this deal.

In the U.S., miraculously, we have dodged this bullet mainly because Republicans have refused to include taxes in the deal. Many Democrats, until lately, have been all too eager to give away the store and sacrifice broadly cherished programs like Social Security and Medicare that have nothing to do with the current financial or fiscal crisis.
He concludes:

... financial elites have won a major victory. The pity is that the press has largely interpreted this in terms of saving the euro and calming capital markets rather than a question of who really benefits and who suffers. A very different strategy could have saved the euro, spared ordinary Europeans the pain of such extensive austerity, and reined in banks to prevent the next crisis from recurring. But that sort of policy change will first require a massive shift in political power.
What his short piece does not convey is the very tenuous nature of whatever solution is ratified by the EU summit on Friday.

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