Pour on more petrol

September 30th, 2012 at 2:45 pm by David Farrar

The Herald reports:

Almost daily, Europe faces questions on whether its once-vaunted single currency can survive, and anti-European Union rumblings echo in capitals where governments are cutting spending in exchange for a bailout from Brussels or to satisfy its scrutiny of the national deficit.

The European Union is in the thick of its deepest crisis – and at its core is whether the ’s design, based on shifts of power from sovereign states to the centre, is fatally flawed.

Yet even in the midst of this turbulent debate, a powerful bloc is saying the answer to Europe’s problem is not less integration, but more.

Last week, 11 out of the 27 EU nations appealed to save the guttering flame of federalism.

“In many parts of Europe, nationalism and populism are on the rise, while the feeling of solidarity and sense of belonging in Europe are dwindling,” the so-called Future of Europe Group said. “We have to take action to restore confidence in our joint project.”

The eight-page blueprint issued in Warsaw calls for closer economic and monetary governance across the EU, including a single supervisory body for banks and closer inspection by Brussels of national budgets and economic strategies.

Now bear in mind that those in Brussels with the power are unelected – they are appointed by Governments. So what is being proposed is to give the unelected officials power over national budgets!

More decisions in the Council of Ministers, the highest political authority in the EU, would be made by majority vote, thus preventing a single country or minor bloc from torpedoing European laws.

This would mean individual countries could be forced by a other countries into submitting to them. The day that happens, expect the EU to shrink dramatically.

“The eurozone crisis demonstrated with lethal force that Europe’s existing instruments of government are just not good enough to give the eurozone the speed of decision-making needed to weather the latest financial storm,” Klau said.

The problem is too much integration. The Euro integrated currency is a disaster.

One ambitious recommendation is for citizens to directly elect the president of the European Commission, the powerful executive, which oversees a budget of €147 billion ($229 billion) and enforces EU laws. He or she would also appoint his or her own team of commissioners.

That would be an improvement, but smaller states will be reluctant to sign up. The US model works because the Senate specifically is designed to protect smaller states. Same in Australia.

Tags:

22 Responses to “Pour on more petrol”

  1. East Wellington Superhero (1,151 comments) says:

    Leftist elites + statism = clusterfuck.

    Vote: Thumb up 0 Thumb down 0 You need to be logged in to vote
  2. Yoza (1,872 comments) says:

    The US model ‘works’ because the US currency is a major global commodity and the US currency is a global commodity because other countries need to accumulate US$s to exchange for oil.

    Because US corporations control the preponderance of the oil distribution racket everyone else is committed to maintaining the value of the US$, usually achieved by buying treasuries-bonds, bills and notes- or just straight out printing money/quantitative easing to a level that allows competitive exports to the US, which are bought with US$ sufficiently valued to exchange for more oil.

    The Euro-zone is not an island in the global financial ocean, it is an instrument with which the European cartel is attempting to preserve the illusion of their economic independence. If the Euro-zone does implode the ‘necessary illusion’ that the “…US model works…” will come under serious threat.

    Japan, China and India will be forced to devalue their currencies to make exports to the Euro-zone affordable and the devalued Euro will force further quantitative easing in the US. The ongoing attempt to ameliorate the effects of the contemporary Great Depression will fail because interest rates are being forced to record low rates by central banks in collusion with the planets major financial behemoths. As the value of people’s savings are shredded by increasing the money supply the interest those savings should be realising are undermined by central bank, low interest rate, policy.

    It will be ‘interesting’ to observe for how long the current global finance racket can thrash about before it loses its grip on power and there is a major paradigmatic shift.

    Every day is another day closer to the revolution, …comrades.

    Vote: Thumb up 0 Thumb down 0 You need to be logged in to vote
  3. Johnboy (16,497 comments) says:

    Thank goodness our wise leaders don’t take their cues from what happens overseas and forge an independent course through the GFC tempest for the good ship New Zealand.

    May God bless all of us who sail on her! :)

    Vote: Thumb up 0 Thumb down 0 You need to be logged in to vote
  4. Paul Matthews (18 comments) says:

    I think more integration is key. The problems were caused by the implementation of central monetary policy in the absence of central fiscal policy – that was never going to work.

    If you’re going to have central monetary policy (ie a universal currency between states, like the Euro or US Dollar) you MUST have central fiscal policy (ie proper central govt) like the United States, Australia, Canada, etc. Otherwise you’ll always get the Greeces that will just get themselves in the poo.

    If Greece had their own currency they would just print more money, devaluing their currency until they were forced to do something about it. Now there is very little incentive to actually fix systemic problems as the rest of Europe will just prop them up. So you end up in the current stand-off situation that’s no good for anyone.

    The concept of the Euro is a good one. The problem is not central monetary policy in itself, it’s the establishment of central monetary policy in the absence of corresponding central fiscal policy. You can’t have one without the other.

    Vote: Thumb up 0 Thumb down 0 You need to be logged in to vote
  5. Johnboy (16,497 comments) says:

    There is a solution Paul Mathews. It’s just that we have already rejected it! :)

    Vote: Thumb up 0 Thumb down 0 You need to be logged in to vote
  6. Manolo (13,746 comments) says:

    The E.U. socialist elites are close to getting their comeuppance.

    Vote: Thumb up 0 Thumb down 0 You need to be logged in to vote
  7. PaulL (5,981 comments) says:

    The underlying Euro problem is that the unelected elites keep thinking they know what is best for the people. And so they keep getting into schemes that aren’t going to work. When the wheels start to come off there is no buy-in from the people to do anything about it.

    Yoza, your views bear little resemblance to reality. To point out one glaring error, the oil trade is not controlled by US corporations (the biggest oil companies are mostly government owned, and not the US govt).

    The Euro will not and cannot work without cultural change in many of the countries in Europe. That cultural change will not happen, as Europeans are very proud of the culture. More integration could in theory help, but actually that is a slippery slope in the wrong direction – the more integration you have, the more integration you need. I think it is inevitable the Euro will disintegrate at some point, not sure whether that time is now though. Depends on whether the Germans want to be in the Euro more than they want to be wealthy.

    Vote: Thumb up 0 Thumb down 0 You need to be logged in to vote
  8. Viking2 (11,467 comments) says:

    Who ever thought the Frogs, the Germans, the Spaniards, the Porteguese, the Italians, the Greeks, the Danish, the Poles and all the other rag tag mob could ever exist together ruled by a huge unelected, expensive overhead were mad in the mind. Add in the Musilm immigration, the pommes plain stoic common sense.

    Was always going to fail. Will fail.

    Would Kiwi’s adopt Aussie Rules.
    Will the Pope wear a Muslim robe?
    Well comes close I reckon.

    Stupid idea from the start.

    Vote: Thumb up 0 Thumb down 0 You need to be logged in to vote
  9. Johnboy (16,497 comments) says:

    Those Porteguese were always going to be the fly in the bloody ointment V2! :) :)

    Vote: Thumb up 0 Thumb down 0 You need to be logged in to vote
  10. DJP6-25 (1,387 comments) says:

    I’m sure Louis XIV, Napoleon, and the Austrian guy with the funny moustache had some frustrating experiences regarding their attempts at European integration too. So it will be with the eletists from Brussels.

    cheers

    David Prosser

    Vote: Thumb up 0 Thumb down 0 You need to be logged in to vote
  11. flipper (4,051 comments) says:

    There are some sensible comments above, but also some unmitigated and ill-in formed rubbish.

    On January 15, 2012 The Outside the Beltway Group published “Demolishiung”

    Some extracts are relevant and support DPF’s post:

    ” Amid the post-election comment, tears and euphoria there were a few words of economic sanity. In a November 26 late night TV interview, John Key referred to the deterioration of world economic conditions and, by way of illustration, noted that in the past few days a bond issue by the German Government had closed with only 60 % being subscribed. In his (retiring) commentary on Monday, November 28, 2011 , the CBA’s CEO, Ralph Norris, described the failure of the German bond issue as a danger signal for the whole world – and a world from which New Zealand and Australia could not escape. The Key/Norris comments went almost unnoticed by the New Zealand MSM.

    ” The question which the Key Coalition Government may have to confront is this: If Europe or the Euro collapse as suddenly as some commentators are saying, how will the New Zealand government respond? How will it create the political conditions which such a situation requires?

    ” In geo-political/economic terms, New Zealand is a pimple on the world. The world economic situation is of greater import to New Zealand than New Zealand is to the world. As a consequence, New Zealand’s future economic success is inextricably bound up with the rest of the world. As a nation, we must therefore turn our immediate attention to ensuring that the country is safeguarded. That may require some hard decisions and cost National short-medium term popularity.

    ” Much of what we are seeing around the world can be blamed on the propensity of governments to intervene in detail in the running of their economies. This has been demanded by their voters (where voters have the option of such a choice), and no government has yet solved the unsolvable problem created by John Maynard Keynes; namely, “stimulating” an economy with deficit government budgets is one thing, but no-one has yet figured out how an administration can back away and withdraw the favours it has bestowed on its citizens in order for state spending to come back into balance. Failing to deal with this issue stores up trouble for later, and arguably we are today seeing the awful consequences, which have expanded ever faster during the last 80 years and a world war.

    ” One result has been the appointment of unelected bureaucrats as government in Italy and Greece. There is no clear path out of this particular attempt to deal with the problem of state debt, and some otherwise sensible people are beginning to look at China and see a “better” way of doing these things. Lots of not-very-benign government interference, and lots of punishment for those who speak out of turn. For most Western people such a development would be unthinkable, but it is another sign that we are in confusing and unprecedented times.

    ” As part of New Zealand’s apparent aversion to “the market” there have been repeated left wing assertions that capitalism has failed. For some in the MSM this has become a mantra. But there was no failure. If Governments had resisted the temptation to meddle in the market, capitalism would have solved many of the problems.

    ” Half a world away, there is the implausibility of the notion underpinning the EU. There were, and still are, too many economic, ” linguistic and customary differences among the countries involved, at the very least. Then there is the question of sovereignty, which the British are at last starting to fret about, and who will likely suffer most from its loss. They’ve almost left it too late, and the model of public servants (in Brussels) taking on the role of governors while not entirely new, sits very uncomfortably with the British sense of nationhood. The British have, after all, fought many wars to protect their sovereignty and freedom!

    ” The idea of a united Europe which would no longer go to war has been around for a long time. Even Adolf Hitler espoused it, though there were, of course, the issues of his governance model and its associated policies. However, the contest for the leadership of Europe has not evaporated with the advent of the EU. On the contrary, the rivalry between France and Germany is alive and well, with Germany seeming to have the upper hand. But of greatest concern is the apparent imminent implosion of Europe.

    ” There have been and still are nations within wider Europe that rely on cross-nation subsidies to maintain their flawed economies. But to attempt to successfully weld together so many nations with different cultures, political systems, and varying approaches to Government expenditure/deficits was always likely to fail.

    ” The defining issue, however, may be the EURO – a manufactured currency that makes business transactions simple in Europe. Its great defect is that it binds members of the euro zone into a single currency exchange rate, no matter what the nature and condition of each country’s economy Thus, one of the most effective levers of economic change is denied to euro zone members. That’s OK for Germany, but not OK for Greece.

    ” (The debate over the political-economic problems of the Euro brings into sharp focus the adverse consequences that would flow from a joint Australian- New Zealand currency. The damage to the New Zealand primary sector would be catastrophic and New Zealand would be a backwater – behind even Tasmania.)”

    Apoloigies for length….
    But nine months after that was published a bunch of folks “outside the beltway” can say: “We told you so”

    Vote: Thumb up 0 Thumb down 0 You need to be logged in to vote
  12. bereal (3,137 comments) says:

    Nigel Firage spells it out in simple terms.

    sorry about the ad at the start of this video, but worth waiting to see Firage in action.
    If u havn’t seen this before you’ll love it.

    Vote: Thumb up 0 Thumb down 0 You need to be logged in to vote
  13. barry (1,317 comments) says:

    Thisis the perfact example of why we should probably never go to a republic.

    Once the supreme control is in the hands of an elected lot – them all shit can happen. We have to retain a system that gives final control to some organisation that doesnt rely on elections (ie: popularism) and the royal family institution has shown that its rather good at that. Whatever repalces it will need to be as good (and as independant)

    Vote: Thumb up 0 Thumb down 0 You need to be logged in to vote
  14. Johnboy (16,497 comments) says:

    The Illuminati perhaps barry?

    Vote: Thumb up 0 Thumb down 0 You need to be logged in to vote
  15. bhudson (4,740 comments) says:

    According to Reid, johnboy, they already are. Unless there has been a leadership change, he claims that our Queen heads the illuminati.

    That requires one to accept Reid’s premise of the existance of such a group and its real influence, of course…

    Vote: Thumb up 0 Thumb down 0 You need to be logged in to vote
  16. Johnboy (16,497 comments) says:

    Reid is a very wise man bh so I would not write off what he says lightly.

    However I would tend to draw the line if it means poor old Charles the Third is the heir to the conspiracy.
    Somehow I just can’t see a fellow with ears as large as his being regarded as anything other than a Dumbo! :)

    Vote: Thumb up 0 Thumb down 0 You need to be logged in to vote
  17. s.russell (1,640 comments) says:

    “The problem is too much integration. ”

    Yes and no. The problem is that it is half-assed integration. Rather like being half pregnant. To fix the problem you have to either abandon it or do it properly – which means more of it.

    Vote: Thumb up 0 Thumb down 0 You need to be logged in to vote
  18. tom hunter (4,809 comments) says:

    The problem is that it is half-assed integration

    The problem is that once you start “integration” you really can’t stop. In other words, if you want to give fiscal control of a country like Greece to a bunch of Brussels bureaucrats then you’re probably going to wind up having central control over all the things that mean fiscal – like hospital spending and the cops. That’s the problem with centralised control, it has to keep expanding or it fails, and it’s expansion leads to that failure, witness Greece:

    Greek bad loans, or those which haven’t seen a payment made in over 3 months, have hit a record €57 billion, or 25% of all bank debt.

    And the bulk of these are apparently business loans, with bad mortgages just behind. As the article points out:

    The reality is that just like in Spain, where between bad loans and deposit outflows, the country has become a protectorate of the ECB, which is now fully in control of its banking system, so too in Greece Mario Draghi’s tentacles are now in every bank office. Should Greece repeat the festivities of this summer and threaten to pull out of the Eurozone, the ECB will merely in turn threaten to push the red button and cut off all cash to terminally insolvent Greek banks.

    Which will not be a solution. Unfortunately neither are these:

    Another change planned is for the extension of the repayment period of housing loans concerning main residences, which currently stands at 20 years. This could be stretched to up to 40 years, based also on the age of the borrower.

    In cooperation with banks, the Development Ministry is promoting a regulation for a 30 percent reduction in the monthly installment borrowers have to pay. This amendment will reach Parliament along with the withdrawal of the names of borrowers who despite being blacklisted for not having repaid their loans since 2009, have managed to pay their dues since then in spite of the crisis. This will be a form of amnesty, used as an incentive for debt payment.

    Remain in debt forever. Get all those other people who lived prudent, and fiscally responsible financial lives, to bail out the deadbeats who, in addition to getting loans they could not afford (and without a gun being pointed at their heads) have now stiffed the system further by refusing to meet their contractual payments. How soon will it be before the prudent people throw in the towel and do exactly the same thing?

    As the article’s final statement says, you don’t incentivise someone to pay their debt by telling them the already massive debt-load will be cut by 30% as a result of it being too great. You incentivise them to pile on even more debt!

    Still, those passionate believers in central government in Washington D.C. do not agree (of course) and apparently think that Europe has turned a corner – As crisis eases, is the worst over for the euro zone?:

    Snapshots to be sure, but there is a building sense that recent steps by the European Central Bank and European officials have put a floor under the euro zone’s festering crisis and begun restoring confidence that the currency union won’t crack apart.

    Probably not at the hands of those who have believed in it from the start or who cling to it now in fright. At the hands of ordinary people – starting with Greece and perhaps expanding to the Spanish province of Catalonia – is another question entirely.

    Greece’s far-right Golden Dawn party is increasingly assuming the role of law enforcement officers on the streets of the bankrupt country, with mounting evidence that Athenians are being openly directed by police to seek help from the neo-Nazi group, analysts, activists and lawyers say.

    In return, a growing number of Greek crime victims have come to see the party, whose symbol bears an uncanny resemblance to the swastika, as a “protector”.

    Yeah. That’s how it starts.

    Seated in her office beneath the Acropolis, Anna Diamantopoulou, a former EU commissioner, shakes her head in disbelief. Despair, she says, has brought Greece to a dangerous place.

    “I never imagined that something like Golden Dawn would happen here, that Greeks could vote for such people,” she sighed. “This policy they have of giving food only to the Greeks and blood only to the Greeks. The whole package is terrifying. This is a party based on hate of ‘the other’. Now ‘the other’ is immigrants, but who will ‘the other’ be tomorrow?”

    Pouring petrol indeed – not just on the banks and the concept of the Euro but the societies themselves.

    Vote: Thumb up 0 Thumb down 0 You need to be logged in to vote
  19. Paulus (2,626 comments) says:

    Helen Clark would love to run the EU – 27 Nation’s State control ……but

    UN can have 178 Country control, as she would like it

    All unelected LEADERS – yea!!

    Vote: Thumb up 0 Thumb down 0 You need to be logged in to vote
  20. tom hunter (4,809 comments) says:

    And more petrol:

    Greece’s state-administered healthcare system operates only 10 pharmacies that dispense pre-paid mood stabilizers and other medications. The country’s approximately 9,000 privately owned pharmacies demand cash that customers can recoup from the government insurance fund. Neither scheme works.

    The reason, of course, is money. There is none. According to the Pharmacies’ Association in Athens, major drug makers are no longer keen to trade with Greece because of the escalating monetary crisis and fears the place will devolve into an economy of hyperinflated drachmas. The whereabouts of stockpiled anti-depressants are mostly a mystery and independent pharmacists gripe that the government currently owes them some €540 million. Thousands of physicians who work for the state’s National Organization for Healthcare Provision (EOPYY) say the government over the past three years has failed to pay them a total of €1.71 billion in outstanding salaries.

    I wonder if the WaPo reporter I linked to above actually investigated any of these on-the-ground facts, or did they simply key off talking to bigwigs in Europe, by phone.

    Vote: Thumb up 0 Thumb down 0 You need to be logged in to vote
  21. PaulL (5,981 comments) says:

    @tom: sounds like mostly crap to me. Australia also runs a government funded insurance scheme that pays pharmacies for drugs dispensed. The normal float in the system is quite large – they take about a month to pay often and there’s some billions of dollars a year dispensed.

    Having said that, I can easily believe that antidepressants and the like are something you could profiteer on – when the currency devalues those won’t change in value – kind of like land, but harder for the govt to tax.

    Vote: Thumb up 0 Thumb down 0 You need to be logged in to vote
  22. tom hunter (4,809 comments) says:

    It sounded reasonable to me because I’m aware of other businesses that are pulling the same stunts as they fear getting caught with “new Drachmas” in any Greek bank accounts they have filled with Euros. Hence no float, and this has been going on for so long there would be plenty of time to have lowered the float. I recall an interview with GM and BMW a couple of months ago where they talked quite about this.

    The shortfall on Greek government payments to private businesses is also wide-spread knowledge – like Illinois!

    Vote: Thumb up 0 Thumb down 0 You need to be logged in to vote