And just as I predicted (back when policy-makers said it was “impossible”) it turns out van Rumpuy & co in Brussels are going the absurd route: attempting to railroad the people of Europe, completely against their will, toward fiscal integration and, effectively, a United States of Europe.
From the Telegraph:
European Union chiefs are drawing up plans for a single “Treasury” to oversee tax and spending across the 17 eurozone nations.
The proposal, put forward by Herman Van Rompuy, the European Council president, would be the clearest sign yet of a new “United States of Europe” — with Britain left on the sidelines.
The plan comes as European governments desperately trying to save the euro from collapse last night faced a new bombshell, with sources at the International Monetary Fund saying it would not pay for a second Greek bail-out.
And in case anyone needs any reminder as to just why this is totally ridiculous:
There is no way that the German people will be shoehorned into picking up the bill for Greek, Portuguese, Spanish and Italian borrowing.
Well, at least they got the message that there is no way a monetary union can work without fiscal integration. The problem is they are about to find out just how hard-to-swallow fiscal integration will be for Germans, who are expected to backstop the free-spending ways of the mediterraneans.
Even if Merkel sells her soul to Brussels for cheap kudos on the internationalist circuit, there is no way the German people will accept the transfer of vast swathes of their productive economy to bail out bankers who lent money to free-spending Greeks, Spaniards and Italians.
And let’s be clear: the bailout money is being used to keep the house of cards also briefly known as the global financial system functional, and to keep bankers’ bonuses rolling.
From the Washington Post:
More than half of the money lent to Greece so far by the International Monetary Fund and European nations has gone to repay bondholders, a transfer of billions of dollars from taxpayers around the world to European banks and pension funds that invested in the troubled Mediterranean nation.
As the country struggles with a collapsing economy, violent strikes and historic levels of unemployment, a new analysis of an international bailout program shows the degree to which money provided to support Greece has been used to pay off its debts to the private sector.
And that’s “capitalism” — wealthy banks and mutual funds that made bad investment decisions get bailed out by everyone else. That’s bullshit — not capitalism.
The system is, in the long run, too-fucked-to-bail. German finance minister Wolfgang Schaeuble called for an orderly Greek default in 2010 when it would have cost 1/3 of what it is expected to cost now. The system needs to break and be rebuilt in a more sustainable shape before it reaches critical mass and collapses in a manner that precipitates global disorder, global hunger and global conflict. Stop the bailouts. If a house keeps falling down then usually there is something fundamentally architecturally wrong with it, and it needs to be rebuilt from the ground up.
I hate to bring this up, but does anyone remember what happened the last time Germany were forced into pledging vast amounts of cash (or “reparations”) to other European nations? No?
It wasn’t pretty.