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Unraveling the Welfare Safety Net
Europe Moves Closer to Banktatorship
June 1, 2012.
The present crisis, which is largely the result of excessive credit expansion and poor risk management by EU banks, is being used by the European Commission and the ECB to establish a euro-wide ”banking union” and to impose savage cuts to social programs, health care, and pensions. The response by EU policymakers is a social counterrevolution designed to transform the 17-member monetary union into a permanent ”austerity zone” ruled by corporate elites and big finance. Here’s more from Reuters:
“The eurozone must boost growth and cut debt to regain investor confidence but it should also move towards a banking union, consider eurobonds and the direct recapitalisation of banks from its permanent bailout fund, the European Commission said on Wednesday as it laid out year-long recommendations.”“A closer integration among the euro area countries in supervisory structures and practices, in cross-border crisis management and burden sharing, towards a “banking union”, would be an important complement to the current structure” of Europe’s economic and monetary union, the Commission said.“In the same vein, to sever the link between banks and the sovereigns, direct recapitalisation by the European Stability Mechanism (ESM) might be envisaged,” the document said.” (“EU calls for eurozone banking union, direct bank recapitalisations”, IFR, Reuters)
The eurozone’s permanent bailout fund, the ESM, has not yet been ratified by all 17 members and already the European Commission wants to change its mandate to include direct bailouts to banks. The direct funding of underwater banks is a blatant power-grab, an attempt to establish the primacy of banks in the same way that the TARP was used to create Too Big To Fail in the US.
Too Big To Fail means that the banks have merged with the state and that taxpayers provide blanket guarantees for their survival. Europe is moving fast towards this same model.
Too Big To Fail means that the banks have merged with the state and that taxpayers provide blanket guarantees for their survival. Europe is moving fast towards this same model.
German chancellor Angela Merkel is opposed to allowing the ESM to recapitalise Spanish banks, but she’s likely to capitulate if the crisis worsens. If she does give in, then the mismanaged banks will not be required to restructure their debt, wipe out bondholders and shareholders, remove bad assets, and replace management. All of the costs for such a bailout would fall on taxpayers, which is exactly what leaders of the European Commission and the ECB want. At the same time, the deepening crisis will be used to impose more fiscal reforms, which have already pushed unemployment to 20 year highs while submerging most of the south in a severe recession. Here’s more from Reuters:
”….ministers in private are clear about their wish to see European-wide bank deposit guarantee measures put in place quickly to avoid the risk of what could be a catastrophic event. There are signs the European Central Bank favors deposit guarantees. Problems are mounting on other fronts. With the cost of borrowing heading rapidly towards 7 percent and most foreign investors already shunning Spanish debt, the government will find it increasingly difficult to refinance 98 billion euros of debt and find another 52 billion euros to fund its deficit this year. Local banks are barely lending, or offering loans at prohibitively high rates, squeezing companies and increasing the risk of a chain of bankruptcies which could send the economy into a nosedive. The banking system’s total loans to the business sector were 44.6 billion euros at the end of March half of what they were at the end of the boom in 2007, and the contraction continues almost every month, according to Bank of Spain data. Consumers are postponing big purchases and cutting back spending. Spain’s soaring borrowing costs have become a national obsession since the crisis….The government acknowledges that the situation is critical.” (“Spain cries for help: is Berlin listening ?”, Reuters)
The EU Commission and ECB are allowing the crisis to grow to achieve their goal, which is the creation of a fiscal union controlled by banks that has unlimited access to funding and the power to impose policy (“austerity”) through coercion.
Here’s a clip from economist Mark Weisbrot who sees the political motive behind the debt crisis:
Here’s a clip from economist Mark Weisbrot who sees the political motive behind the debt crisis:
”I have argued for some time now that the recurring crisis in the eurozone is not driven by financial markets’ demands for austerity in a time of recession, as is commonly asserted. Rather, the primary cause of the crisis and its prolongation is the political agenda of the European authorities – led by the European Central Bank (ECB) and European commission. These authorities (which, if we included the IMF, constitute the “troika” that runs economic policy in the eurozone) want to force political changes, particularly in the weaker economies, that people in these countries would never vote for.” (“Europeans’ economic future has been hijacked by dangerous ideologues”, The Guardian)
It’s all politics. Right wing politics. 100 percent of the reputable economists that have commented on the debt crisis have criticized the way it has been handled, particularly in regards to austerity measures. Do you really think that Merkel or Draghi think that they’re smarter than Stiglitz, Krugman, Reich, Eichengreen, Thoma, Weisbrot, Galbraith, Baker, Roubini, etc. etc?
No. Merkel has no background in economics at all, and Draghi was formally an investment banker for Goldman Sachs.
These people are not interested in fixing the EZ (Eurozone) economy. They are engaged in a stealth campaign to radically restructure EU society, to unravel the welfare safety net, to roll back the progressive gains of the last century, and to reduce much of the continent to 3rd world poverty.
A banking union will further solidify the power of big finance over the individual states, and that is the main objective.
A banking union will further solidify the power of big finance over the individual states, and that is the main objective.
MIKE WHITNEY lives in Washington state. He is a contributor to Hopeless: Barack Obama and the Politics of Illusion (AK Press). Hopeless is also available in a Kindle edition. He can be reached at fergiewhitney@msn.com.
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Dat de Banken de macht zouden overnemen werd al in 1966 beschreven door een professor die jarenlang vertrouweling was van de Grote Bankiers, en enige jaren in hun midden verbleef en studeerde.
In Carroll Quigley's beroemde boek 'Tragedy and Hope' komt deze constatering voor:
( Toen Bill Clinton president werd van de VS heeft hij tijdens zijn inauguratie-rede nog een dankwoord aan zijn 'grote voorbeeld' professor Quigley, uitgesproken.
Quigley is dus niet de eerste de beste.)
Quigley schrijft ook in hetzelfde boek:
The Council on Foreign Relations (CFR) is the American Branch of a
society which originated in England... (and) ...believes national boundaries
should be obliterated and one-world rule established. I know of the operations
of this network because I have studied it for twenty years, and was permitted
in the early 1960's to examine its papers and secret records. … I believe its
role in history is significant enough to be known
Uit dit tweede citaat leren we dat de Bankiers niet willen dat Europa uit elkaar valt, want ze hebben nu juist deze centralisatie altijd gewenst. Het liefst maken ze alle nationale staten machteloos.
