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Re: Rise of the Fourth Reich: Germany to conquer EU?
Yesterday’s crisis meeting between Angela Merkel and Nicolas Sarkozy was arranged before the participants knew of the disastrous growth figures in the Eurozone that emerged in the morning.
The background to the meeting was last week’s tumult in the world financial markets. Shares had gone into freefall after the downgrading of America’s credit rating.
Worse than that, however, were the tremors rattling some of Europe’s most important banks, notably in France, caused by further evidence of the utter failure of even the more developed European economies to live anything like within their means.
Chancellor Merkel has managed to use the hard-earned money of German taxpayers to bail out profligate Eurozone countries without suffering any political fall-out. This is unlikely to remain the case and Mrs Merkel knows it.
That is why yesterday she played down talk of the European Central Bank — funded by German-backed Eurobonds — paying off the debts of these all-but-bankrupt nations.
Instead, there was forceful talk of Eurozone countries being coerced into balancing their budgets and reducing their debt through what Merkel and Sarkozy called a ‘true European economic government movement’ made up of all the heads of state and led, initially, by the EU President Herman Van Rompuy.
Frau Merkel called for a ‘stronger coordination of policy’ and ‘a new quality of cooperation’ within the Eurozone.
Although she will not yet admit it, this all suggests the first step has been taken towards a fiscal union that will leave Germany dictating the financial terms for the rest of Europe.
It is the one country that is able to do so. Greece, Ireland and Portugal are economic basket cases. We have heard more and more about the trouble in Spain, where unemployment is over 20 per cent.
Italy is tottering — the figures for 2010 show it has debts of 116 per cent of GDP, making the country second only to Greece at around 143 per cent.
Meanwhile, the recent addition of France to the list of at-risk economies has caused real shock and panic across the Channel. Its banks hold about an eighth of Greek debt, or $57 billion, its stock market has tumbled and credit rating agencies are talking of removing France’s triple A status.
So, after a summer of increasingly shrill panics around the Mediterranean, the contagion is moving north. Individual bail-outs have been tried, but they obstinately refuse to work. Only an idiot would think they would: they treat only the symptoms of Europe’s economic decline, not its causes.
If only everybody could be like the Germans, and spend just a mite more than they earn, then all would be well, the markets seem to say.
Germany lay in ruins in 1945, but it then invested in manufacturing plant, developed first-class education, innovated, raised its productivity and competed on quality not price.
Over the next 60 years it won the peace as comprehensively as it lost the war.
If the euro is to survive — and with it the European project — the other 16 Eurozone countries will have to be like the Germans. Indeed, they must lose the freedom not to be like the Germans.
That means a complete fiscal union in which Germany, as the EU’s most powerful economy and principal paymaster, makes the rules and makes them unbreakable.
George Osborne interrupted his holiday in austerity-free Beverly Hills a fortnight ago to make this point by telephone to the European Commission and the ECB.
It is a high-risk strategy on his part, for if such a plan succeeded it would make Europe effectively a German empire, with non-Eurozone countries such as Britain on the sidelines.
Mr Osborne clearly believes we have no choice. His concern is that if the European economy implodes we would be badly damaged: not so much because of the debt owed by countries such as Greece to British banks, but also because of the loss of export markets in the Eurozone countries and investment by them in Britain.
However, the prospects of Germany’s partners in the Eurozone are starker still.
If the global financial markets continue to have no confidence in the sticking-plaster rescue packages offered by Eurozone leaders, some nations will go bankrupt — one or two, such as Greece and Ireland, are already more or less trading while insolvent.
They may hope their salvation, apart from pulling out of the single currency and devaluing, would be to accept Germany properly bolstering the euro and effectively colonising the Eurozone.
This would entail a loss of sovereignty not seen in those countries since many were under the jackboot of the Third Reich 70 years ago.
For be in no doubt what fiscal union means: it is one economic policy, one taxation system, one social security system, one debt, one economy, one finance minister. And all of the above would be German.
That is not merely the price the markets would demand to be confident about the euro’s future, and to be happy to buy debt that could help fund Greece, or Ireland, or Italy. It is also the price that Germans themselves seem to be demanding for their support.
Stern, the German news magazine, conducted a poll last week among Mrs Merkel’s own supporters that showed that 52 per cent were opposed to her bail-out policy, and 62 per cent worried about the course of her party generally.
She is only two years from having to fight another election and cannot defy democratic gravity for ever.
Germany has already pumped 120 billion euros into the 440 billion bail-out fund. It is the fifth biggest economy in the world, which would mean that imposing its way of doing things on the other 16 nations would carry tremendous clout internationally.
It also has another reason for needing to shore up its partners: 42 per cent of its exports go to the Eurozone, with France alone taking 90 billion euros’ worth a year.
However, the latest figures show that demand for German goods is slowing, as is German growth. Shortly before the extent of the French problem with Greece was made public, Commerzbank — one of Germany’s leading banks — announced that it had to use 93 per cent of its second-quarter profits to write down $1.1 billion of Greek debt.
If Germany is to continue to prosper, Europe must prosper: but a ruthless solution may have to be imposed in order for that to happen. If the European project is to continue, Germany will not merely have to underwrite it, but control it.
The recently-agreed European Financial Stability Facility is not the answer. It is just another in a series of sticking-plasters that allows the ECB to buy the bonds of debtor nations to keep them solvent.
All these sticking-plasters are designed in the belief that the wound will not become yet more gaping: but it always does.
The alternative is the massive surrender of sovereignty to Germany by the rest of the Eurozone that would allow the economic policy of Greece, Ireland and Portugal to be made in Berlin.
That would reassure the markets, but it would also remove any pretence of democracy in those 16 countries: for once you have lost control of your economy, you have lost your sovereignty.
Every spending department in every government in the Eurozone would have its policy made in the old capital of Prussia.
And if the people did not like their governments being left with fewer powers than a county council, that would be tough. The alternative is ruin.
Where Hitler failed by military means to conquer Europe, modern Germans are succeeding through trade and financial discipline. Welcome to the Fourth Reich.
Re: Rise of the Fourth Reich: Germany to conquer EU?
About half of Evo's members are European. So what's everyone's stance on the EU crisis and whether or not Germany has to step into the breech to save it? Depending on which Euro country you live in, would you rather your country leave the EU or give up your own sovereignty to save it?
Re: Rise of the Fourth Reich: Germany to conquer EU?
call me an idiot but i'm willing to try the german way.
there are so many incompetent people deciding my country's future it's not even funny. they had 20 years since communism ended and we're almost where we were then. so, hell, whatever comes i'm up for it.
Re: Rise of the Fourth Reich: Germany to conquer EU?
call me an idiot but i'm willing to try the german way.
there are so many incompetent people deciding my country's future it's not even funny. they had 20 years since communism ended and we're almost where we were then. so, hell, whatever comes i'm up for it.
While it is idiotic to give up sovereignty, from a European standpoint I can actually understand having such a stance. Europe has been pushing this pipe dream down your throats for decades, it's finally here, it's not good, but desperate measures must be taken to save it.
I can see why the UK straddles the fence in regards to integration into the EU. Once you take that step, there's no going back. Yes the UK and others could pull out but it would be disastrous.
It's interesting how the post Cold War era turned out. The US(and by proxy Europe) had carte blanche in the 90s and it wasn't handled very well at all. You know my stance on NATO so I wont start another full scale rant on that, but do European citizens in general consider the US/NATO and the EU to be a conflict of interest? If the EU can ride out its crisis and get back on its feet and become a legitimate power, I would imagine they would eventually want to distance themselves from us.
I read a lot of news sites from Europe and the comments under the articles are very interesting, especially the debates regarding the UK. Some want full integration into the EU and if they wont go all the way, people want them out of the equation believing they will be marginalized to the point of becoming a virtual US vassal state. If the UK continues its indecision, wouldn't be surprised if they're told to pick a side.
What do European citizens in general feel about the EU being fully implemented? It would in essence be one country. Europe is a melting pot and its hard to imagine everyone just falling in line with one leader.
There are downsides obviously, especially the scenario described during the 2008 crisis where under harsh economic conditions the world could see another Hitler rise from the ashes of the EU. Considering the fact two Euro nations have nuclear weapons, it would be a very dangerous situation.
IF the EU goes in the direction of being more like one country led by one prez/pm/party, it might pave the way for the world's nuclear powers to talk about a major reduction in nukes in an attempt to neuter Europe. Such a strategy would definitely keep the US there long term though as there's no way Europe would consider a serious reduction in its arsenal without security guarantees, whether its the continuation of NATO or moving away from being tied to the US and signing a defensive pact with Russia.
Re: Rise of the Fourth Reich: Germany to conquer EU?
The EU is failing because it's the typical result of a half-assed compromise between ideological directions. No matter how hard you try, you can not have your cake and eat it too and that's exactly what we (and most notable Germany and France) have been trying to do. You cannot be unified and at the same time keep your full sovereignty.
The French and the German people are very proud of their heritage, and to a certain extent rightfully so as both countries have produced and continue to produce great things. But they continue to make the classic mistake that the only way to protect their historic achievements is by trying to extrapolate them into the future.
I can tell you right here, right now that if we don't consolidate our economic system Europe will see it's economic AND political importance dwindle even further. We need to speak with one voice and cultivate one vision when it comes to economic matters simply because scale is an every important factor in our globalizing world. You cannot expect a decision with regards to taxation, economical incentives, bail-outs, etc... have repercussions on your neighboring countries' economies therefore it's in our best interests to make sure that our legislation is unified across the continent (or at the very least an entity that is considered big enough to be self sustaining in our global economic reality).
Sovereignty is a ridiculous goal in and by itself. It doesn't have anything but sentimental value if the legislation passed in your neighboring countries or even by any global economical power can disrupt your local economy; which just happens to be the case right now and there's no way that a single small country will be able to stand up for itself if it wants to be part of the global system.
Time to stop being sentimental, time for the UK to drop it's delusional ideas that a little island nation can be a self-reliant global player, time to forge a real unified Europe.
Re: Rise of the Fourth Reich: Germany to conquer EU?
agree 100% w/the mole
i believe in the European Super State
Re: Rise of the Fourth Reich: Germany to conquer EU?
I dont know enough about economics to comment. But I cant see it ever happening, people are too patriotic and rightfully so. Europe is a melting pot of cultures with far reaching history, show me a country that doesnt traditionally depise their neighbours!
Even in Britain you've got 4 countries that a significant percent of the population are hell bent on independance from the "UK"
Re: Rise of the Fourth Reich: Germany to conquer EU?
Germany pushes Greece to the brink in dangerous brinkmanship
Germany and Holland have threatened to block rescue payments to Greece unless the country complies to the letter with bail-out terms, raising the spectre of default and a chain-reaction through southern Europe.
German finance minister Wolfgang Schauble said there will be no more money until Greece "actually does" what it agreed to do. "I understand that there is resistance among the Greek population to austerity measures. But in the end it is up to Greece whether it can fulfil the conditions necessary for membership of the common currency. We offer no discounts," he told Deutschlandfunk. The wording has been taken as a threat to eject Greece from EMU, though is there no legal mechanism for such drastic action.
Dutch finance minister Jan Kees de Jager said the Netherlands "will not participate" in further payments to Greece unless it secures the go-ahead from the EU-IMF Troika, which left Athens abruptly last week after talks broke down.
The showdown in Greece came as the European Central Bank (ECB) abandoned its push for higher interest rates and slashed growth forecasts for the next two years, warning that the situtation is "extraordinarily demanding" and that "downside risks" have intensified.
"The hiking cycle has been aborted," said Carsten Brzeski from ING, adding that rates may even be cut from 1.5pc if the economy worsens and deflations rears its ugly head.
Jennifer McKeown, at Capital Economics, said the ECB will have to cut rates twice over the next six months as the global downturn deepens. The bank raised rates in July even though eurozone growth had already ground to halt, a move widely deemed to be a policy error.
Willem Buiter from Citigroup said the ECB must cut rates immediately to shore up Italy and Spain. "As long as they are willing to walk down the hill again as swiftly as they walked up it I don’t think any lasting damage was done. They have to change course," he told Reuters.
Jean-Claude Trichet, the ECB’s president, said the bank had been given a clear mandate by "the democracies of Europe" to hold inflation below 2pc and has stuck to its task. "We have delivered price stability, impeccably. I want to hear congratulations," he said in an emotional defence of the bank.
The ECB cut its growth forecast for next year to 1.6pc from 1.9pc, and to just 1.3pc in 2013, implying a long slump that will leave the eurozone’s weakest economies trapped in recession with crippling unemployment. The downgrade comes as the OECD club of rich states issued its own grim outlook, predicting that Germany’s economy would contract in the fourth quarter of this year.
Credit default swaps (CDS) on Greece have risen to record highs and two-year debt yields have reached 47pc as markets braced for the "endgame" of a long-running saga. "There is no threat of Greece exiting the eurozone," said Greek spokesman Ilias Mosialos, insisting that the country will deliver on key reforms.
The tough line on Greece reflects hardening opinion in northern Europe rather than egregious backsliding by the Greek government of George Papandreou, who inherited the current mess. Swingeing austerity has itself caused the economy to spiral downwards and miss targets. Output shrank at a 7.3pc rate in the second quarter of this year, a dire outcome after almost two years of recession. Barclays Capital said the budget deficit may remain stuck at 9pc this year.
The Greek parliament's own watchdog said the debt dynamic is "out of control". Public debt will reach 172pc of GDP next year. The policy of an IMF-style austerity package without the usual IMF cure of debt restructuring and devaluation appears to have tipped the economy into 1930s debt-deflation. The self-evident failure of the strategy makes it extremely hard for Mr Papandreou to secure democratic consent for further cuts.
Harvinder Sian from RBS said the sovereign humiliation of Greece by EU creditor states smacks of colonialism and can expect to meet fierce resistance. It may be tempting for Greece to precipitate a "hard default" before the second rescue package comes into force and switches a large stock of debt contracts from Greek law to English law, he said.
It is not clear who is in the stronger position in the latest round of brinkmanship between Greece and the German bloc. If pushed too far, Greece can set off a powderkeg. The International Monetary Fund says European banks are highly vulnerable and need to raise their capital by €200bn. Many of the weakest are in Germany.
The Greek crisis has spilled over into Cyprus, raising the risk that a fourth country will soon need an EU bail-out. The island’s finance minister Kikis Kazamias said he is mulling a request for help from the ECB after 10-year Cypriot bonds rose above 13pc. "We do not have the luxury of being choosy about who is going to lend to us," he said.
While Cyprus is too small to be systemically important, its banking system is roughly nine times GDP with liabilities of €156bn, according to Fitch Ratings. This is equivalent to Iceland before it blew up. Cypriot banks have 40pc of their assets in Greece, and hold a significant chunks of Greek debt.
The ECB is facing brushfires across a string of countries. Traders say it intervened yet again on Thursday to stabilize Italy’s debt markets, acting to prevent spreads over German Bunds nearing the danger level of 400 to 450 basis points where LCH Clearnet raises margin requirements.
The bank has already accumulated more than €129bn of Greek, Irish, Portuguese, Spanish and Italian debt. It may be near its political limits within a few more weeks, given open protest from Germany’s Bundesbank.
The ECB is buying the bonds on an understanding that Europe’s €440bn bail-out fund (ESFS) will take over the task once its revamped powers are ratified by all parliaments, which could drag on until next year.
Barclays Capital said Italy and Spain have already slipped back into industrial recession, ratcheting up the pressure. The question is what will happen if the global economy fails to stabilize quickly.
Italy faces €62bn of debt redemption this month, and €170bn by the end of December. The ECB’s ordeal by fire may yet be ahead.
Re: Rise of the Fourth Reich: Germany to conquer EU?
I dont know enough about economics to comment. But I cant see it ever happening, people are too patriotic and rightfully so. Europe is a melting pot of cultures with far reaching history, show me a country that doesnt traditionally depise their neighbours!
Even in Britain you've got 4 countries that a significant percent of the population are hell bent on independance from the "UK"
They've no choice
Re: Rise of the Fourth Reich: Germany to conquer EU?
I dont know enough about economics to comment. But I cant see it ever happening, people are too patriotic and rightfully so. Europe is a melting pot of cultures with far reaching history, show me a country that doesnt traditionally depise their neighbours!
Even in Britain you've got 4 countries that a significant percent of the population are hell bent on independance from the "UK"
Maybe they have no choice, but people are too set in their ways. In regards to the EU, which my country is not apart of (but still is) people have a strange way of looking at EU.
My opinion is that we voted "no" to the EU based on the idea that people actually thought we would "loose" our nationality. Norway would no longer be Norway, but Europe. As some form of occupation. The funny thing is that as we are a part of the EEA, we have to follow their rules anyway, but have nothing to say in the matter. It's ridiculous if you think about it. Norway has had an extremely regulated alcohol policy for years and years which have culminated in an unhealthy and weird relationship to it (I usually point to Americas odd relationship to naked skin, tits and ass as the same beast, just dressed up different).
Now, as we are part of the EEA we are largely dictated by the EU and their laws, we can't keep banning alcoholic commercials even if we keep kicking and screaming we won't accept it. We're apart of it regardless, but since we're officially not part the EU, people have relaxed about it and they all know for a fact we're not "invaded". But, indirectly we're just as much as a member as anyone else.
We don't despise any of out neighbours. Sweden and Denmark are our brothers. We like a good tease and few jokes, but we're very much alike. And historically, Great Britain has been a very strong ally since WW2, we even have a connected royal family (for those who gives a shit).
But, Norway will most likely never agree to join the EU. Our economy is good, we never got hit by the financial crisis, and people here like to think we're free or something since we're not in the EU. People like their illusions, and they will fight for them. What does it matter if we're in the EAA when we're not in the EU - the big bad occupational force...
I might underrate the general guy, but from what I've seen from working in the social systens, people are just fucking dumb.
