SO THE Germans have finally got what they wanted, albeit seven decades later. They finally dominate the whole of Europe including Great Britain, for it seems even tough talking Lord Airbrush of Cameron has become Chancellor Merkel’s latest poodle following French President Sarkozy’s retreat back to Paris.
The British Prime Minister, who is rapidly developing a reputation for promising one thing and doing the opposite, had a slap up luncheon with his German counterpart last week in order to soundly respond to calls from the battered British public for our nation to exit the shambolic Eurozone.
But U-Turn Dave knows his history. He knows all about appeasing the Germans; after all, one of his Conservative predecessors, Neville Chamberlain, found it second nature to capitulate and allow Germany to take control of European nations without opposition.
As such the outcome of Baron von Cameron’s dealings with the Führerin should come as no surprise. The man who promised a referendum on the Lisbon Treaty in order to get elected looks set to sign up to a brand new Lisbon Treaty with some very minor concessions, sealing a further commitment to Europe that the British people simply do not want.
Techno techno techno techno
In recent weeks two unelected members of the European elite were parachuted in to run Greece and Italy with a crystal clear mandate: save the Euro at all costs. The Greek interim Prime Minister, banker Lucas Papademos, created the work of alleged accounting fiction that allowed Greece to enter the single currency in the first place, and “Super” Mario Monti is an economics professor who happens to be a former EU commissioner.
There will most definitely be some drastic changes in the pursuit of single currency salvation: the cuts so far are mere swarf. These technocrats will hack pounds of flesh from their respective budgets until the books finally balance, and they will be blamed for all of the pain incurred by their respective people.
This, of course, is exactly what the political elite want.
These interim rulers are unelected fall guys, drafted in to make cuts without concern for winning votes. They will take the blame for the failings of previous administrations, most of whom still have fierce political ambitions, and then they will disappear back into the non-democratic European regime.
They are the perfect type of scapegoat for European politicians, whose dilemma was summed up perfectly by the Prime Minister of Luxembourg in 2010;
We all know what to do, but we don’t know how to get re-elected once we have done it.
It seems like a bi-weekly event now that the European Financial Stability Fund (EFSF) is increased in volume with more (quantitavely eased) money allocated as country after country admit their economies are down the Swannee. These massive financial commitments to continuity of the Eurozone as we know it come at the expense of the European taxpayer, so if the house of cards collapses, we all suffer.
For the French and German politicians, a Greek default is their worst nightmare, which is why they are desperate for Italy and Greece to swallow their medicine. A default would act as a giant financial snowball across Europe; Ireland and Portugal may well follow suit, and those involved in bailing out these countries would finally realise the huge financial losses which currently look inevitable. Many French and German banks would instantly go bankrupt.
In Greece the run on the banks has already started, with around 20% of deposits withdrawn in the last two years. This is precisely what these banks, who hold billions of Euros of Greek sovereign debt, do not want. The time when a customer arrives at a bank and is told they cannot have their money is looming, at which point the European Central Bank would have to step in and pay out with money it doesn’t have.
It is no surprise that this bank run has not been well publicised, as it may accelerate and prompt further runs on other European banks that are basically bankrupt already, but surviving on a capitalisation cushion of taxpayers’ bailout money. If this happened, suddenly we would all have just one bank – the European Central Bank. Maybe this is what they want.
A banking collapse would wipe out any prospect of nations such as Italy and Spain having a European sugar daddy to keep their country going, and further chaos would ensue.
Eurozone chiefs have already tried to diminish the Greek debt problem by forcing creditors to write off 50% of their Greek exposure, which means that half of the money thrown into the black hole will never resurface. Default, of course, means that there is a possibility that none of it will.
Realistically a country of 11 million people that owes £340bn (around 150% of its GDP) is never going to be able to pay the money back. At least if Greece is kept afloat, albeit using borrowed money, the elephant in the room can be ignored a little longer.
Making the best of a bad situation
Neither Chancellor Merkel, President Sarkozy, nor any other non-Greek European politician actually care about Greece. They care about both their European powerbase and their opinion polls. However, they can see that the big bad wolf of inevitability is huffing and puffing, ready to blow their house down.
Whilst these two eurocrats want to maintain the Eurozone, in the back of their minds is the doom scenario which would see their banks go bust and their people turn against them.
Merkel has exposed Germany to billions of Euros of Greek debt, which in the case of a default they will probably not get back. The Germans will not be happy about suffering the pain of somebody else’s mistakes. It could end up so bad for Merkel that Germans will be restocking their extermination camps with Zyklon B in order to wipe out the government that sucked their great nation into this black hole.
In France, the Front National are once again building up support, with Jean-Marie Le Pen’s daughter Marine set to be a serious challenger for the French presidency in 2012. Of the European crisis, Mr Le Pen said that Sarkozy was furthering the interests of a “cabal of international finance and free market fanatics.”
Merkel makes her mark
Whilst David Cameron seeks to lead when it comes to waging war against other countries, in the Eurozone crisis it appears that Angela Merkel is calling all the shots.
There have been calls for the Bundesbank to use its gold reserves to back the EFSF, and these calls were met with “no”. There have been further calls for the creation of Eurobonds which would effectively be a very long term commitment from Germany to share the debt of the other countries who spent too much. These were met with “no” as well, for they are not a solution, merely a sponge to soak up the problem a little longer.
Merkel is calling for countries within the Eurozone to sort themselves out and provide a proper political answer to their debt problems. In short, they need to boost growth massively and in a sustainable manner, they need to make massive cuts, or the two need to meet in the middle.
Easier said than done.
Britain’s economy is stalling. Even now, the government has not implemented a level of cuts which will even dent the incredible national debt. In fact, current spending levels are in cash terms higher than those of the previous government under Gordon Brown.
- The public sector is still huge and highly resistant to accepting any share of the cuts.
- The private sector is still at rock bottom, pummelled down with pay cuts and freezes in 2007 which still have not thawed.
- Incentives to start business are non-existant, and unskilled jobs are being, we are told, soaked up by immigrants.
- Enterprise zones are discussed in pointless talking shops, yet nobody thinks to turn the entire UK into one.
- The state is paying out benefits which to some are more lucrative than minimum wage work.
- There is no control over benefits families, in fact they are encouraged, with every child yielding an increase in benefits.
- The state pension is pathetic, private pensions are a risk which people cannot afford to take, yet the public sector pension is gold plated, encrusted with diamonds and paid for by those who are as a result deprived of a retirement income.
- The housing market still has not completely descended into a realm called reality which facilitates owner occupation by first time buyers (yet it seems that David Cameron wants to follow in Gordon Brown’s footsteps in trying to artificially maintain property prices using borrowed public money).
All the while, MPs remain immune from the pain and Pandora’s great big Box of debt remains closed.
Unlike Germany, Britain doesn’t have a manufacturing powerhouse, nor does it have 3,500 tons of gold as security after Gordon Brown wrapped up over half of Britain’s reserves in an envelope and sent it off to Cash 4 Gold (we now have less than 10% of the gold that Germany has).
In the scenario that the likes of Greece, Ireland, Italy, Spain and even France implement severe reforms and eventually operate a budget surplus, in ten years they could be blazing away from Britain having diminished (or even removed) the burden of debt which David Cameron claims is dragging Britain’s economy back. Would we still be battling the debt problem because our hand is not being forced?
Could we even be the Greek crisis of the next decade, going to a newly reformed, cash generating Eurozone with our begging bowl?
U-Turn Dave has his hands tied anyway. Unlike Greece and Italy, he can’t bring in a technocrat to make the cuts, then resume power once they have been implemented. On the other hand he doesn’t want to get voted out, so he will continue to make commitments on spending that he just cannot sustain.
Labour would do exactly the same. They are trying to differentiate themselves at the moment, with Ed Balls claiming that a small cut to VAT for one year constitutes a “Plan B” and will solve everything. Realistically though, the two parties could not be closer in policy terms, indicated by Labour’s remarkable silence on the current issue of public sector pensions.
Neither party has a proper framework for cutting the debt; they only offer measures for maintaining the status quo, pretending that the debt problem doesn’t really exist whilst making interest payments totalling tens of billions of pounds per year.
It is clear that neither Labour nor Conservative politicians are prepared to gamble their political careers like the bankers gambled our money. It is clear that neither will stick their necks on the line for the good of the country, to be hated in the short term, but admired in decades to come.
They’re all millionaires. The status quo suits them just fine.
Perhaps the rise of the Front National in France is a harbinger of our future politics.