Escape from EU: Rise of the 4th Reich
Where is Snake Plissken when you need him? Greece is in shambles. Spain is on the brink and the planet is on the verge of realizing it never recovered from the last recession. Japan evidently already realizes it as Tokyo’s stock market hit a 28-year-low today, New York will undoubtedly react. While some in Europe are rallying jittery technocrats to centralize and unite, reason urges otherwise.
The New York Times reports:
“Mario Monti of Italy called for using euro bonds to create a quicker path to common debt for Europe. And Mariano Rajoy of Spain floated the idea of a common fiscal authority in Europe to synchronize budgets and manage debts.
German policy makers have said that kind of deeper budget integration and supervision is a prerequisite before any sort of euro bonds could be issued.”
This process, to embolden Brussles, is estimated to take between five and ten years, but the wonderful thing about a crisis is its ability to motivate. To be sure, whatever happens will happen soon. George Soros predicts three months and Joschka Fischer, Germany’s former vice-Chancellor, gives EU leaders two weeks to save the project.
Either the EU will crumble beginning with Greece’s departure on June 17th after their elections and return to the Drachma (test trading since last week) or a more powerful central government in Europe will emerge.
If this sounds a bit scary it should. Spain’s Rajoy urged the 17-nation union to “cede more sovereignty” to a central fiscal authority and parroted the European Commission’s call for a banking union with a single regulator and deposit guarantee fund. Joining the pro union chorus is also new French Finance Minister Pierre Moscovici: “We need to go toward a banking union,” he said on RTL radio. With that the socialists are officially on board in Paris. The thing is who has the money to put where their mouth is? Not Rajoy. Not Monti. Maybe Moscovici, but Germany on the other hand…
Given the current crisis Soros sees a possible 4th Reich ahead, “a German empire with the periphery as the hinterland,” he said. While CNBC says this was a “warn[ing]” from Soros his statements clearly suggest he wrestles with little misgivings on the prospect.
With northern creditor nations bailing out ailing Spain and Greece, Germany is effectively at the helm and Soros knows it. “We need to do whatever we can to convince Germany to show leadership and preserve the European Union…the future of Europe depends on it,” said Soros, reports Bloomberg News.
If you listened to Mosocovici the entire planet depends on what happens in Europe and therefore how Germany plans its next move. “Let’s not delude ourselves: If the euro falls apart, so will the European Union, triggering a global economic crisis on a scale that most people alive today have never experienced,” he said, reports The Daily Telegaph.
In a way he might be right, the world is walking a tight rope finer than frogs hair. US employment numbers are wilting, a fact Obama “lays at the feet of European leaders.” Brazil, China and India all see anemic growth. Iran has been writhing in hyperinflation since at least January with fresh sanctions taking their effect at the beginning of the month and the rest of Middle East on perpetual red alert with Syria in the throws of civil war. To top it all off the first world isn’t setting any kind of example. The OECD club is at a record average public debt of 106% of GDP and the red flags in bond markets couldn’t be raised higher:
“German 10-year Bund yields closed at 1.17pc. The two-year notes turned negative. British Gilts closed at 1.53pc, the lowest in 300 years. US Treasuries fell to 1.45pc, lower than at any time during the Great Depression.”
Greece is aflame with persistent protests, Cyprus isn’t looking good, neither is Portugal and Italy’s ex-premier Silvio Berlusconi claims his “people are in shock. Confidence has collapsed. [And they] have never had such a dark future.” The Daily Telegraph’s Ambro Seevans Pritchard agrees:
“Indeed, the jobless rate for [Italian] youth has jumped from 27pc to 35pc in a year. Terrorism has returned. Anarchists knee-capped the head of Ansaldo Nucleare last month [and] Italy’s tax office chief was nearly blinded by a letter bomb.”
If the real politik lesson holds – let not crisis go to waste – who will pass this global opportunity up?
Should history provide us prologue as it often does. This is exactly the time when the fearful and insecure turn to anything for security. With these nations biting their nails strength will need to come from somewhere, lets hope it comes from independence not unity. Perhaps this is a time when Germany should exit, followed shortly by France and allow the EU to stand on its own for what it is, “a valueless and physically unattractive monument to the hubris of bureaucrats who valued an economic ‘system’ over any actual economies,” writes Tim Cavanaugh of Reason.
The European experiment has failed. Attempting to prolong the endeavor will only beget more crises down the road. Individual states should stand on their own, go through the necessary withdrawals and kick the bailout addiction and let the pusher banks sucker some other region. Let not your hearts be troubled, if the euro is destroyed it will be scary, but we’ll all be the better for it.
It is interesting to note, however, with all the buzz talk about the zombie apocalypse and 2012 how fitting it would be to see Germany’s Angela Merkel leading her zombie states army into perpetual debt slavery.