The historical trend of the euro and its previous incarnations has followed this historical pattern, when we take a leftist view:
The Eurozone is dominated by France and Germany; France wants an end to austerity and to promote growth policies bloc-wide; Germany wants more austerity to maintain its dominant financial position; Germany, Washington’s Frankenstein Monster – whose violence stems not from parental and societal rejection but unfeeling hypocrisy – wins.
And Germany wants a smaller Eurozone, so…why doubt that a contraction is on the way?
I have already written how the Eurozone has a hopelessly corrupt and undemocratic structure, and I have also written about how it is primed for collapse because the recent years of Quantitative Easing did not strengthen the real economy but instead was diverted into investments in high finance/stock markets which have almost no societal benefit.
So what happens when the QE tap is finally turned off after all these years?
The Eurozone is expected to decide this week to stop Mario Draghi’s QE, tapering it off until its termination.
Well, this 7-part series was largely written two months ago: It now seems extremely likely that the European Central Bank will not announce the end of QE on October 25, after all.
I doubt that is due to my rather dire prediction of what will happen when QE stops, because the danger posed by the end of QE is obvious to any journalist following Europe.
That’s why Reuters titled this just-published article, “High noon for the ECB, Draghi at the QE Corral”. Draghi represents the strong, silent type/peoples’ representative Gary Cooper, while high finance is the Miller Gang who is ready to lay waste to the entire village for their benefit. The real question is: what is Grace Kelly doing in such a hick village, but if I answer that I’ll have to add a “Gunfight at the OK Corral” metaphor, and trying to explain Reuter’s convoluted headline has gone on long enough.
The latest general prediction is that monthly bond buying will be cut by just 33% – 60 to 40 billion euros – and that it will be extended into next year. These amounts are peanuts in the multi-trillion grand scheme of the Eurozone’s bailouts. However, we still don’t know if the scary end date will be finally announced or not.
This “flexibility” is the main thing to take away from Draghi’s upcoming announcement: (from Reuters) “…the bank would maintain the flexibility and even signal a willingness to increase asset buys if the outlook sours.” Translation: the ability for taxpayers to bail out private banks remains in place, along with the direct-free money of QE, as well as the negligible interest rates which provide nearly-free money to those not well-placed enough to benefit from the direct-free money.
The likely postponement shouldn’t be too surprising: The ECB has already postponed tapering off QE before. The same two reasons provide the motivation: Firstly, this program geared for the 1% is quite lucrative for them, and secondly, they know that there is going to be hell to pay when they do.
But my key question – which is the basis of this series, and is a Communist-inspired accusation of capitalism – remains: when the era of “free money” ends, and knowing that the 1% can never be satiated, how long do the devilish speculators wait to strike the Eurozone, as they did in the summer of 2012, which provoked QE?
My second key question – inspired by a complete lack of faith in the Eurozone project, as a result of its structure and its results – also remains: how can an era of “free money” for the 99% ever start when the solidarity required for a pan-continental project does not exist?
The book “And The Weak Suffer What They Must?” by former Greek finance Minister Yanis Varoufakis, a fake leftist but admirable whistleblower, has provided the jumping-off point of this series and I have quoted his findings often to prove the structural and cultural absence of Eurozone solidarity (mainly) on the part of Northern Europe.
“…the Bundesbank was, and remains, prepared to do ‘whatever it takes’ to stop Mario Draghi in his tracks. The fact that Herr Weidmann (Bundesbank President) has so far failed is testimony to Chancellor Merkel’s determination not to have the euro crumble on her watch. But, as Draghi knows too well, neither he nor Berlin can afford to ignore either the Bundesbank’s wrath or its preference for a smaller euro area.”
And because QE must end sooner rather than later (they are literally running out of bonds to buy), regardless of the probable inability of the ECB to say this clearly on Thursday, the plan for a multi-speed Europe is already in place: Once the era of free money ends, that new era is certain to begin.
To briefly restate what I have predicted for the Eurozone: we will simply go back to 2012 – Greece will leave or not, and high finance will go back to “testing” foreign bank debt-burdened countries like Portugal, Italy and Spain in the hopes of forcing a Troika-led “bailout”.
So you see the depth and the scope of the problem, and why the question is not “if” but “when”?
Could be on Thursday…doubt it will take until 2019
How do you feel Europe? Ready for some historic changes?
Things are lining up very well for the 1% in Western Europe since Brexit: Macron won, Merkel was re-elected and with an even more pro-capitalist coalition to boot, Madrid is reclaiming control over Catalonia (rather up in the air there right now, I’ll grant), anti-austerity protests in France have fizzled as Macron is waging a blitzkrieg against the French social model. Things are going very differently in Central Europe, however, which I will address shortly.
Allow me to examine here the possible reasons why the 1% will refrain from blowing up the system for their own profit this Thursday.
As the predictable, repeated backtracking of the ECB shows – they are still getting free money, and people also realize that the Eurozone’s economic state is too perilous to make a major change right now. But there are some other credible reasons that high finance could hold off until 2019:
European MPs are up for re-election then…but it’s not as if they have more power than high finance, LOL! And it’s not as if Europe’s 500 million citizens have historically had a say in the structure of Europe, anyway.
European Commission (1/3rd of the Troika) President Jean-Claude Junker is also up for re-election, but he said he won’t run for a 2nd term. LOL, he knows it’s a sinking ship, but he may not want it to sink on his watch. But again, it’s not as if he has more power than high finance either. And it’s not like there’s a risk of a non-Junckerian communist being put in charge of the EC….
The most plausible reason for a high finance-forced delay is that the EU wants Britain to pay as much as possible for Brexit, and that occurs in June 2019. The EU needs to have a united front to get maximum value, which Brussels has said could be €60 billion, maybe more. However, €60 billion obviously pales in comparison with the money in play in the Eurozone; with the money the 1% can make by forcing Spain, Italy, etc. into accepting horrible, Greek-style, Troika-led bailouts before a possible Eurozone expulsion. There is another important faction which wants the Greeces to stay, so for them the larger issue is to scare other nations from pulling a -exit.
To me, these last reasons are the only plausible ones which would cause contraction to be held off for 1 or 1.5 years. As I said, QE could be extended until then, and they could even prolong it by expanding their bond purchases of European corporations, which is at least better than giving free money to banks.
But the QE tap will be turned off, and then no mo’ Zone Euro
Like I said: huge crisis, Troika bailouts, more austerity, chaos for the average person, even more inequality…and then finally changes to the Eurozone! At long last!
But if you are expecting a major collapse – a major tarnishing of the European brand – you aren’t thinking like a capitalist.
It will be a velvet coup. I have already described the plan, which is in place and agreed-upon: There will be a two-speed Europe; this has already been approved by the four major economies – Germany, France, Italy and Spain.
The rich economies will pursue deeper integration, and poor nations will be tossed aside, along with the long-time, false, fig leaf of effort at “economic convergence”, a capitalist euphemism for the communist “redistribution of wealth” between rich and poor European nations.
The key propaganda line they will use is, “No new rules are needed, as the existing rules are already in place.” EU rules already do allow groups of at least 9 member states to pursue “enhanced cooperation”.
Therefore, no referendum is needed; there will be no vote; they will say that “the rules for a multi-speed Europe have already been democratically approved in previous votes” (except the 8 times they were democratically rejected (these rejections were obviously ignored)).
So this is the key to remember, Eurozone members:
There will be no changes to the current horrible situation; no changes to the atrociously undemocratic nature of the Eurogroup (which controls the all-important Eurozone, the world’s largest macro-economy); no minutes of the Eurogroup’s monthly meetings; no democracy within the group; no parliamentary oversight; the total rejection of democratic votes which aim to influence Eurozone policy (as in Greece); no changes to the status quo, which works just fine for the 1%.
And remember that before the crisis gets too big where the 2-speed Eurozone becomes official: Usurious bloodletting continues, as does forcing labor code roll backs all the while. This helps explain Macron’s feverish assaults on the longtime “bad example” of France: it’s clear the end is near, and so he has been told to put as many pro capitalist/pro-globalization rules in the French law books as possible. A French public, exhausted from years of protesting and filled with apathy, is proving to be unable to stop the slide.
And when that day finally comes when the “new” Eurozone debuts and the Greeces are freed: The rich members will simply take their money and go home. You can expect a bill from them every month thanks to the waves of privatization – ports, airports, water departments, laws favoring their own industries against local industries – over the past 30 years.
So what is the 2-speed system?
In short, it will be the nations of the Eurozone versus the nations of the European Union who have not accepted the euro.
We must remember the very clear geographical and cultural division here: The Eurozone is composed of Western Europe, a few islands and tiny principalities, the three rabidly anti-Communist Baltic states and the former Czechoslovakia. Only the latter is the real exception here, and I will soon discuss how unhappy even they are.
So we see how prepared for an easy division Europe already is.
I think we can all agree – given the perilous state of the Eurozone and the atrocious mistreatment of its weaker nations – no Central European nation is crazy enough to want to join the euro, not even fanatically pro-Europe Poland: a poll this spring showed only 22% of the population still wants to adopt the euro.
So we also see how hardened this division already is.
We should also understand that this division is coming very soon, the discussions are ongoing and public, and that it does not need to be preceded by the Eurozone economic crisis which I have described…although that would inevitably speed up the process.
Add this all together and it’s clear that we will see the true splitting up of Europe. The 1st-speed group will include the Eurozone members working t…or at least the ones who have not required a bailout and have been approved to join the new club. If they stiffen up entry requirements, the Eurozone could very easily contract out multiple nations, leaving only North and West Europe.
And that is what Germany has always wanted.
Even though Germany (along with France) broke the EU’s fiscal rules in 2003 before anyone else; even though countries like Greece and Portugal had “morally correct” fiscal balance prior to being loaded with foreign banker debt; Germany has made no secret of its unjustified contempt for the weaker Latin nations.
When history is written it will show that Germany (along with the 1% in other Western nations) orchestrated the economic gutting and domination of all Europe, which set them up for part two: the inevitable domination of the lower-speed Europe by the strictly-rich Eurozone.
And why would the less-rich nations accept this? Well…they won’t.
Central Europe may not stick around to find out
Again, do you think they will join the euro now?
The most capitalistic aspect of the euro is probably its precondition that any nation wishing to join has to suspend any controls over the movement of money in or out of the country for two entire years.
That should be the sound of your jaw dropping.
So any nation which wants to completely sell off their national heritage to the rich capitalists of Western Europe and America (but also Japan, China, South Korea, Saudi Arabia, Qatar – anyone with money), and also wants their native 1% to engage in massive capital flight…well, it’s your funeral. Such a rule is clearly meant to advance the national interest of richer countries rather than the interests of their alleged partners in the pan-European project.
The Visegrad Group – Czech Republic, Hungary, Poland and Slovakia – has already said they would leave a multi-speed EU, because why on earth would they bind themselves to the 2nd-tier, where they have no hope of attaining parity? The Eurozone is pure capitalism with unequal regulation and no solidarity: that means the largest corporation wins, and the 2nd tier can’t possibly compete.
Of course, Western Europe does not give a fig for these protests against a multi-speed plan which violates the 1991-era spirit of the pan-European project in every way. Tone-deaf, “democratic strongmen” like Macron will continue to push for it in the hopes that Central Europeans will continue to be duped by false promises of equality.
Central Europe is waking up: they will always be second-class citizens in Europe
The reality is that in recent years reporters in Central Europe have noted that the European Union/Eurozone has been able to achieve something that Communist-era governments constantly tried to do, but were never able to: tarnish the image of the Western model.
The pan-European project has definitively proven to Central Europe that they are not viewed as equals by Western Europe, and that they were included only to provide nearly the same quality of work for one-third the wages.
Heck, the Visegrad countries even had to protest the inequality of ingredients in the exact same food products if they are headed for Central Europe and not Western Europe. This type of stuff does not go unnoticed and is not easily forgotten: Western Europe has no conception of this humiliation shared by the victims of imperialism.
Let’s remember that the horrific dismantling of Central Europe’s socialist economy in the 1990s was underpinned by a promise that they would be accepted and treated as equals by Western Europe…that has not happened. The currently 40- and 50-year-olds believed the promise of capitalist politicians, disbelieved the warnings from their parents that life under socialism was not so bad, and completely ignored the moral arguments of their grandparents in favor of socialism and against capitalism/corporate fascism.
Abundant statistics bear this out: in Slovakia real incomes rose by nearly 50% between 1970 and 1985, but dropped during the 1990s; GDP only regained its 1989 level in 2007, and has remained stagnant ever since – undeniable failure.
A few decades is long enough for Central Europe to get the picture…so let’s accept that we have a new historical, cultural reality here: the old analyses will not apply as effectively.
This nearing middle-age generation is waking up, and they are justifiably unhappy. Thus we have the Czech Republic – probably the most culturally-Western nation in Central Europe –just electing a billionaire to be prime minister, but one who is paradoxically Eurosceptic. Something does not add up here, but as I said these are totally unique, distorted times in Central Europe.
Central Europeans have concluded that the pan-European project – the European Union – has essentially brought only two positive developments: better transportation (which benefits Western capitalists via better ease of business) and open borders (encouraging brain drain & cheap labor, and thus benefiting Western capitalists). Before you fly off the handle, nativists: open borders are a human right, but they must be accompanied by socialist regulations on capitalists to protect local wages.
Please notice that I didn’t add “protect local culture”: The idea that immigrants, the Roma, or Muslims are the cause of Europe’s degradation is hilarious, and you look like a fool if you make such a claim. European imperialism has turned on itself, and national socialism is not the solution. However, international socialism is.
The result of Central Europe’s rejection of modern socialism and choosing intra-European imperialism is obvious to all: Germany has colonized Central Europe, taking advantage of their historical, cultural and geographical ties, and used the profits to dominate Western Europe as well.
The immediate reality is that from Visegrad to Romania, a two-speed or multi-speed EU will not fly – after 30 years they no longer “look up” to Western Europe. A more powerful reality is that Western Europe will simply push out Central Europe, and it doesn’t even need another Eurozone crisis to do so: contraction is coming soon, regardless.
The rejection of socialism in favor of undelivered pan-European promises has left Central Europe currently looking like a used-up, indebted, aging, mistreated woman who is bitterly looking for an easy scapegoat… but that’s just what capitalism does to everybody. Certainly, socialism is the only societal solution to all that.
My prediction for how it all WON’T change
As we now see that the multi-speed Europe is inevitable, and that Central Europe will be pushed out, we are still left with a problem many nations face: being a Eurozone member.
The fastest route to real change is if one country takes on the role of the noble martyr and leaves the euro, taking all the pain, head-on. In the short-term, as Varoufakis estimates: plan for 1 year of total financial chaos.
But is any Eurozone nation ready or willing to do that? You would need major revolutionary fervor – nationwide, mind you – to sustain everyone through the year of short-term pain.
But long-term it’s even more demanding on the People: it would take an Iranian-style revolution – with no WTO membership, with a war of banking sanctions, with constant media character assassinations, with constant encouragement of subversive elements by foreign powers, with shortages orchestrated by the 1% percent as in Morsi’s Egypt – to get back all the assets which have already been sold off, and also to renounce all the unjust economic contracts they have already signed.
Because why just “leave” the Eurozone if you want to remain in the capitalist system; if you want Germans to keep control of your water department, the French your port, and the Dutch your dairy industry?
It doesn’t make sense, does it?
But that IS the only long-term battle plan. If it sounds like you don’t have the stomach for that…then you aren’t considering a lifetime of penury and subjugation, which is the only other choice.
That’s the reality check.
‘I will not stay and I will not go’ – the undiscussed option
Nobody in Europe ever seems to think about the option of using paralysis to your advantage…the sit-in, the long-term strike, the repeated spanner in the works. Of course the mainstream media forbids such discussions, but still….
There’s a much better alternative than waiting for that rogue financer to force the issue and call the bluff on Europe’s “Ponzi austerity”, and it is not promoted by Varoufakis: At some point some nation is going to refuse to play by the Eurozone’s rules and also refuse to leave the euro. Nobody has really discussed this type of “outside of the box” possibility.
Such a threat means to stay in the euro…while kicking and screaming about making the necessary rule changes to finally introduce democracy in the Eurozone.
Obviously, this requires a call to implement anti-austerity economics which Western Europeans are simply too scared to call by name: communism. (This fear is examined in the next part of this series.)
Somebody with some power – not some bozo like me or just a Finance Minister – will pull the veil off, show the ugliness underneath, and yet will insist to keep parading her around at the dance for all to see. “She may be ugly but she’s mine!” The first step to acceptance is establishing existence.
At the same time, this nation will refuse to play nice in European institutions – where absolute unanimity is required very often – and bring them to a halt. And other Eurozone countries will, I believe, listen.
What I can try to predict is: Who will be this rogue country?
There has been no real hero in the Euro crisis so far. Hollande – the ultimate patsy or “the meekest of leaders”, as Varoufakis wrote; Le Pen – an intellectually uncommitted clown; Mario Monti – no revolutionary but at least something of a nationalist for standing up for Italy and for a European banking union in 2012; Syriza – betrayers; Podemos – committed to working within the system and preoccupied with preventing the Balkanization of Spain.
And yet, I contend that the “hero”, or even the “villain”, should be Spain.
But before getting to that: it sadly appears that Central Europe is not going to be the hero, although they are capable of bringing the European Union to a halt, and even though they should do exactly that after decades of capitalist rape. But private control of the media means that socialism is never discussed, and that the scapegoat is not the unrighteous 1% but foreigners. Show me the Central European nation where the current narrative isn’t a continuation of “reactionary, capitalist nationalists continue to consolidate power after the era of international socialism”; show me the leftist leader on the rise over there; show me the country where a political revolution/genuine restructuring of society is occurring like in 1979 Iran or in 2017 Syrian Rojava?
Spain is, crucially, where high finance is watching most closely – today as in 2012.
They are the biggest major economy on the edge, and their People have suffered real privation. Something or someone should come from there to determine the balance.
Whatever they do will…work! If Spain wants to work within the euro and save it; the euro will be saved. If Spain wants to break off into Catalonia and other regions and abandon the euro; other nations will be happy to join them. Dissatisfaction is so high in the Eurozone that SOMETHING has to happen.
But because Spain would not be a surprise, and because revolutions are always a surprise (this is a rather tired trope, I’ll agree), I predict France will make the change.
No, I’m not biased, just speculating
Idiots in the US talk about impeaching Trump for tweeting, but I really cannot understand how the French will tolerate the smug, young, capitalist strongman Emmanuel Macron for 4.5 more years? Macron, far more than Trump or any other Western leader, has already overplayed his hand and alienated the public to incredible degree. His approval rating is lower than Trump’s. France also has a history of serious protest.
This prediction is in line with the historical analysis, after all: As I have proven, the EU was originally conceived by France as a Franco-German alliance against American imperialism, and France tried for decades to get Germany to give up austerity and to help fund (along with France) pro-growth policies.
And if we pull back to this historical view, what I am saying is that history can plausibly be read like this: France’s decades-long proposed alliance fails…so they take a different tactic – total rebellion – to save themselves. Makes sense, no? France has the power and clout to do it – and others would certainly join them and abandon Germany.
It is possible that the looming Eurozone economic crisis will force the young, somewhat unknown Macron to have a “coming out” party, where he does a 180 and proves to be the type of leader the times demand: an independent one.
But that’s far less likely than this scenario: The huge protests which are currently too tame become even worse than 1968-levels after the French public catches their breath and when the Eurozone crisis does hit, forcing Macron to step down. 20% of France voted in May’s election for a candidate whose main plank was to end the Fifth Republic – the economic crisis makes this a majority. A new leftist wave takes power and demands real changes. They don’t get them, of course, so they form that 2nd Euro bloc I mentioned, abandoning Germany and austerity and picking up Spain, Greece, Italy, etc.
That means we could have a truly divided 3-speed Europe: Germany and their minions like the Netherlands, Luxembourg and others, France leading a pro-growth Latin bloc, and Central Europe charting a sorely-needed new course for themselves.
Yes, the idea that Germany and France remain together to install Cold War 2.0 – Western (Eurozone) Europe versus Eastern (non-Eurozone) Europe – is a more likely scenario. This would play into the hands of Eurasia, as the Chinese One Belt, One Road system would have to be welcomed all the way to the Hungarian Plain, unlike in the year 1241.
Regardless, this is a multipolar world now, and the idea of 3 truly separate centers of power within Europe with truly different ideologies is fun to contemplate, no? And, beyond fun, it clearly would represent progress when compared with the current undemocratic, capitalist status quo in Europe.
But let’s not let this speculation detract from the real point of this article: economic mismanagement has pushed us to the certainty of implementing a multi-speed Europe.
Some say it will contain two speeds, some say it will have three speeds, and there’s a real possibility of an economic collapse into zero speeds. But it is coming, and soon. This process – which is so slow and so planned and so open that it cannot be called a “crisis” – is due to the lack of democracy and socialism in the pan-European project, and which has forced this coming, certain failure in the pan-European project.
Separately, when the ECB turns off the tap, as they eventually will, then you will have a real crisis for which there are no simple solutions. But creating crises – “Forced recession as a tool of social war against the 99%” – is the final article in this project.
However, “The English-speaking world’s fear of calling communism, ‘communism’”, is the next and penultimate article. That is because this fear – this inability to discuss politics, economics and morality openly and honestly – is the root evil and root cause of the current European social disorder.
This is the fifth article I have written in a 7-part series on today’s Eurozone which will combine some of Varoufakis’ ideas with my 8 years of covering the crisis first-hand from Paris.
Here is the list of articles slated to be published, and I hope you will find them useful in your leftist struggle!
The Eurozone has likely entered its final calendar year, contraction coming
The English-speaking world’s fear of calling communism, ‘communism’
Forced recession as a tool of social war against the 99%