Europe's fiscal Fascism brings British withdrawal ever closer

[Cees Binkhorst]

REPLY TO: D66 at nic.surfnet.nl

De hoek, waaronder het belicht wordt, doet een paar haren overeind
staan, maar het onderwerp is natuurlijk wél reëel de komende tijd.
De tekortkomingen van de EMU, als die niet wordt geschraagd door de
politieke unie, met de aparte regeringen.
De eigen volk/land/elite eerst filosofie.

Groet / Cees

Europe's fiscal Fascism brings British withdrawal ever closer
By Ambrose Evans-Pritchard Economics Last updated: May 14th, 2010
http://blogs.telegraph.co.uk/finance/ambroseevans-pritchard/100005678/europes-fiscal-fascism-brings-british-withdrawal-ever-closer/

Just when you thought the EU could not go any further down the road
towards authoritarian excess, it gets worse.

The European Commission is calling for EU powers to vet budgets of the
27 member states before the draft laws have been presented to the House
of Commons, the Tweede Kamer, the Folketing, the Bundestag, the
Assemblee nationale, or other national parliaments. It applies to
Britain even though we are not in EMU.

Fonctionnaires and EU finance ministers will pass judgement on the
British (or Dutch, or Danish, or French) budgets before the elected
bodies of these ancient and sovereign nations have seen the proposals.
Did we not we not fight the English Civil War and kill a king over such
a prerogative?

Yet again we are discovering the trick played on our democracies by
Europe’s insiders when they charged ahead with EMU, brushing aside
warnings by their own staff economists that monetary union was
unworkable without fiscal union. Jacques Delors knew perfectly well that
this would lead inevitably to a crisis, but it would be the “beneficial
crisis” that would force sovereign parliaments to submit to demands that
they would never otherwise accept.

This is now playing out before our eyes. Club Med governments have built
up €7 trillion sovereign debt under the cover of monetary union, which
shut down the warning signals for borrowers and creditors alike. We are
now near – or beyond – the point of no return. Eurozone states must go
along with this cynical entrapment, or risk economic catastrophe. The
conspirators have succeeded. The €750bn shock and awe package agreed
over the weekend clearly alters the character of the European Project,
crossing the line towards an EU debt union and an EU Treasury. How long
will it be now before the EU acquires direct tax-raising powers?
　
As French president Nicolas Sarkozy said: “We have a veritable economic
government”. I hope the excellent and proud French people realize what
this means before it is too late, as it is for the Greek, Irish,
Portuguese, and Spanish peoples. They are being forced by the logic of
the economic machine to squeeze fiscal policy at a time when they are
either recession or trapped in a deeper perma-slump without offsetting
stimulus. A Deutsche Bank note to clients said these countries have
given up all three instruments of economic control: fiscal, monetary,
and exchange. They are powerless. We are under an “EU protectorate”,
said Spain’s opposition leader Mariano Rajoy last week, though it was
empty, useless rhetoric since he does not draw any of the necessary
conclusions from this intolerable state of affairs.

In Brussels, Mr Barroso wants EU powers to monitor current account
deficits and credit growth – under pain of sanctions – in order to stop
booms running out of control. “We must get to the root of the problems,”
he said.

Notice how one-sided this is. The entire adjustment burden falls on the
people of the Club Med states – including his own nation, Portugal –
though they are already trapped in debt-deflation. There is no
recognition that the EMU system itself is fundamentally dysfunctional
because the euro was painted on a cultural canopy that cannot possibly
be deemed an “optimal currency area”, nor that these countries have been
grossly violated by the entirely predictable – and predicted –
perversions of EMU.

There is no hint that intrusive EU surveillance powers should be used to
compel Germany to increase spending and tolerate higher inflation so
that the EU’s North-South divide can be bridged by the both camps
meeting each other half way. All responses are tilted in one direction:
deflation, fiscal austerity. This is the Gold Bloc fallacy of
Continental Europe from 1931 to 1936, the policy that led to Bruning’s
destruction of Weimar, Laval’s near destruction of the Third Republic in
France with his deflation decrees. It was a precursor to Laval’s fateful
role as the Nazi enforcer of Vichy. He was later executed by firing
squad, vomitting from a botched suicide with cynanide.

The reactionary character of the EU system is astonishing to behold. Mr
Barroso – a Maoist student protester on the revolutionary barricades,
turned Thatcherite, turned … what exactly – a Salazar, a son insu? – is
becoming a serious danger to civil society and the survival of European
democracy.  Señor Barroso, a decent man, needs to step back and ask
himself what on earth is going to be achieved by imposing a deflation
death spiral on a large swathe of Europe.

Nor is there any recognition at all that the European Central Bank was
itself partly responsible for the crisis that has now engulfed the
South. We all forget that the ECB ran a persistently loose monetary
policy during the bubble – Greenspan Lite, let us call it – and an
overly tight policy after the bubble burst. A double whammy for the GIPS.
It missed its own inflation target every year, and by the end it was
tolerating an 11pc growth rate in the M3 money supply (against a target
of 4.5pc, but by then it had abandoned its Bundesbank tradition of
monetarism). This was pouring petrol on the property fires of Ireland
and Spain.

The ECB has since let M3 contract, doing its own part to ensure a replay
of 1931, at least until Europe’s politicians read the riot act on Friday
and forced it to buy Greek, Portuguse, Irish, and Spanish bonds, albeit
sterilized and injecting no net stimulus into the euroland system. This
resassertion of political primacy is entirely appropriate. The idea that
central banks should not be accountable to democracy is monstrous and
untenable. Besides, they had their chance.

They showed themselves unfit for independence. Their doctrines were
found to be pseudo-science.
Why did the ECB pursue policies that were so destructive for the GIPS?
Because it was helping to nurse Germany through its long
post-reunification slump in Phase I, and then bowed to Germany’s phobia
of non-existent inflation in Phase II from 2008 onwards. ECB policy was
twisted from the start to help one (mentally unhinged?) country. Let us
at least be honest about this.

I do not envy David Cameron and George Osborne as they navigate these
lethal waters. As Bruno Waterfield reports from Brussels, they will face
their first clash next week when the new Chancellor is presented with
the Barroso proposals, that is to say proposals for a reversal of the
English Civil War and the re-establishment of Stuart monarchical absolutism.

The truth is that no British government can ever put Europe on the
back-burner and hope it goes away. It hits you in the face, again, and
again, and again. This is why so many British ministers end up feeling a
visceral hatred for the project.

In my view, the EU elites overstepped the line by ignoring the rejection
of the European Constitution by French and Dutch voters, then pushing it
through under the guise of the Lisbon Treaty without a popular vote,
except in Ireland, and when Ireland voted ‘No’, to ignore that too. The
enterprise has become illegitimate – iis starting to exhibit the
reflexes of tyranny.

The moment of definition is fast arriving from Britain. The measures now
being demanded to save monetary union cannot and will not be accepted by
this Government, Nick Clegg not withstanding. The most eurosceptic
people I have ever met are those who have actually worked for the
European Commission, though it takes a while – and liberation from
Brussels – for these views to ferment.

The outcome – une véritable gouvernement économique – will put Britain
and the eurozone on such separate courses that it will amount to
separation in all but name. The sooner we get the nastiness of divorce
behind us, the better.

RSS COMMENTS
     *

       We won’t hear this type of analysis on the BBC then Ambrose? Nor
your colleague Jeff Randall’s analysis today of 13 years of Brownomics?

       I’m getting a very bad feeling about how matters economic and
social are going to pan out over the next 3 – 5 years. There’s trouble
blowing in the wind.
       Moraymint on May 14th, 2010 at 11:07 am
       Report comment
     *

       Ambrose, it would be lovely to suppose you were right and that we
are on a trajectory out of the clutches of the EU. But I am afraid you
have overestimated David Cameron, who is as Europhile as Edward Heath
(although he has used his PR skills to pretend the opposite). I want
urgently to get this Heathite period in British politics over and done
with, so we can get to the Thatcherite renaissance.
       djw2009 on May 14th, 2010 at 11:10 am
       Report comment
     *

       “I do not envy David Cameron and George Osborne as they navigate
these lethal waters.”

       But that is why David Cameron is the youngest prime minister
since Lord Liverpool, why George Osborne is Chancellor of the Exchequer,
and why you are International Business Editor.

       Those who can, do; those who can’t, teach; those who can’t teach
knock out penny-a-liners.

       I would not mind betting that Dave is itching for a confrontation
with the European Commission on an issue where he knows the British
people will wholeheartedly support him. If the European Commission calls
for EU powers to vet Britain’s budgets before the draft laws have been
presented to the House of Commons, he will tell them to get stuffed. Not
in those exact words of course. He is an Old Etonian after all.
       Junius on May 14th, 2010 at 11:12 am
       Report comment
     *

       As a matter of interest, how do the other non-euro countries feel
about this? eg Sweden & Denmark (long-term EU members) or Czech Republic
(a newcomer with recent experience of being ruled from afar). We never
seem to hear their reactions, giving the impression that Britain stands
alone. Maybe we do, but if not, then it’s time to counter the divide and
conquer approach.
tanker21  on May 14th, 2010 at 11:16 am

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