What recovery? Undemocratic and corrupt, the EU faces dis-Union
from The Daily Bell
Posted August 31, 2011
Double-dip fears across the West as confidence crumbles … The Western world is at mounting risk of a double-dip recession after key measures of confidence collapsed in both the United States and Europe, with Germany the steepest one-month fall since records began in the 1970s. The IMF has slashed its growth forecast for America and Europe, according to a leaked draft of its World Economic Outlook. – UK Telegraph
Dominant Social Theme:
Everything has been going very well, and employment and profits are picking up. So let’s not spoil a good thing, eh?
This article in the UK Telegraph takes a dim view of the “recovery” that the West is supposed to be enjoying. In fact, it cites a good deal of evidence to show the West’s economic situation is about to get even worse. In doing so it all but predicts the EU itself – or at least the euro – may be only weeks away from fracturing.
This is good, of course, though perhaps (unfortunately) over-optimistic. The EU is nothing but a fascist enterprise that should be broken up as soon as possible. Astonishingly, the appendages of the EU have not been audited for years because the auditing firms will not take responsibility for an institution of such corruption.
There is an inner circle in the EU that is answerable to no one expect perhaps the great banking families of Europe and America that have created this monstrosity. It is from this tiny circle of “leaders” – all of them either coming from communist or socialist backgrounds – that EU policy is created.
The result is a mishmash of oppressive regulations and overweening ambition. The EU leaders have had ambitions to build an army and to create a fuller union of EU states that will mimic the worst federal excesses of the United States.
What is even worse is that all of this was planned long ago; even as EU member states and their populations were being assured that the EU was nothing but a large trading facility, its top executives were plotting and planning a 400 million strong, federal union. One hears echoes of that today, as academics and politicos alike call for a closer EU to counteract the implausibility of the euro’s current condition.
In fact, these days the euro itself is not a currency mechanism so much as a kind of metaphorical manacle that increasingly is keeping Europe’s Southern flank – miserable and bleeding – tied to the richer North. The result: higher taxes, resource fire-sales and the slashing of public services and retirement benefits.
Of course, we’ve long predicted that the EU, or at least the euro, is in significant trouble. This is based on the idea, generally, that there is no “recovery” – not in America and not in Europe. In fact, Europe’s Southern PIGS are bankrupt; meanwhile, the US’s unemployment refuses to go down and may even be headed up.
What’s left? The world’s economy basically hangs on the thread of China and as we’ve tried to point out in numerous articles, that’s a thin support indeed. China’s social unrest is actually quite staggering at this point, though under-reported. Its much discussed (finally) empty cities, skyscrapers and malls are symptomatic not of central planning so much as communist party desperation.
The ChiComs will do anything to meet their self-imposed growth targets. But the result has been the biggest building and buying binge the world has ever seen. It has to end sometime, and it is very possible that it will put an end to the Chinese government itself. Without China, the world will reel round like a drunk looking for a handhold.
Without support, the global economy will fail. India, Brazil and Russia shall not provide salvation. Germany will not salvage the EU, for without anyone to buy its products, Germany will participate in the upcoming worldwide “recession.”
But the UK Telegraph article tells us to expect grim times – really grim ones – even without China’s participation. In the US, we learn, the US Conference Board’s index of consumer sentiment “plunged to the lowest level since the depths of the slump in 2009, falling to 44.5 from 59.2 in July.”
Meanwhile, Christine Lagarde, new chief of the International Monetary Fund, put her wrong foot first, irritating the Germans and then the French by discussing a global crisis is entering “a new phase.” This was not welcome news to the leaders of either country, and the Germans especially do not want to be pressured into supporting a weaker euro, no matter how concerned Ms. Lagarde is.
Lagarde is actually reacting to her own research. We learn from the Telegraph that the IMF has slashed its growth forecast for America and Europe, according to a leaked draft of its World Economic Outlook. Lagarde and the IMF want American and European central banks to print more money, even though it doesn’t seem to be working. The Germans know it; the IMF does not seem to.
The Germans apparently understand that nothing can be done, at least when it comes to Spain, Portugal, Greece and Ireland. Lagarde’s IMF disagrees. Jose Vinals, the IMF’s head of capital markets, “rebuked Europe’s leaders for failing to beef up bank defences and allowing the debt crisis to fester.”
Vinals received support from Charles Dumas of Lombard Street Research, who said a further “recession” in the West is inevitable because of fiscal deflation. What should have happened? The ECB should have loosened considerably this summer; Jean-Claude Trichet, Europe’s central banker has got it all wrong, and has been behind the curve besides.
Yet can Trichet really be blamed? He’s feeling considerable heat from the Germans who have claimed that the ECB has engaged in “legally questionable” purchases of Spanish and Italian bonds. The Germans apparently feel they are losing control of the ECB, even though it is German money that drives the EU and the euro.
The rhetoric is building in Germany. The Telegraph notes that Hans-Olaf Henkel, former head of Germany’s industry federation (BDI), wrote in the Financial Times that his support for the euro had been “the biggest professional mistake I have ever made.” What’s the solution? A so-called ‘Plan C’ under which Germany, The Netherlands, Austria and Finland make their own currency, leaving the South to struggle on without the straightjacket of a German euro.
Stephen Jen from SLJ Macro Partners believes that the EU’s debt-ridden Southern flank may act first, as politicians revise their views on the PIGS’ unpopular austerity and propose radical solutions featuring disunion either of the EU itself or of the currency. “I think this will happen in weeks rather than months,” the Telegraph quotes him as saying.
We are not holding our collective breath. (Just today there are reports that Merkel DOES have enough votes to push through yet another EU bailout package in Germany.) But it does occur to us that the combination of an intractable sovereign debt crisis, an oncoming German recession and a court case intended to decide whether Germany’s current government is acting unconstitutionally may be enough – eventually – to crack open the union.
We have never predicted in the past what may happen to the EU, at least not in the short term. In fact. this deeply dishonest political system was meant to grow by crisis. Its top men assumed that there would come a time when the euro would not function properly. One can even make a case that the European banks were encouraged to acquire sovereign debt in order to precipitate the current crisis.
But something happened on the way to a closer union. We believe the Internet Reformation has thoroughly exposed the plans of those at the top in a way that was not anticipated. It is one thing to manipulate people who do not understand what’s occurring. It is another to move ahead with a slippery program that people understand is not in their best interests.
The EU, if it fails, becomes merely one more dysfunctional meme. It takes its place in an increasingly long line that includes the foundering war in Afghanistan, the rising tide of disbelief over the war on terror, the obloquy that global warming now attracts, the derision to which central bankers are increasingly subject, etc.
The 21st century is nothing like the 20th. The great banking families are losing control of communications and increasingly cannot configure their messaging. Mainstream media is struggling to survive. The vast fear-based promotions rolled out by Tavistock Institute are not working so well these days. The directed history that seems to have run the world for nearly 200 years is becoming undone. This world lives in interesting times. Such lack of elite control was seen last some 500 years ago during the era of the Gutenberg Press, which led to the Protestant Reformation and a wholesale shift in the way populations were controlled.
It may be that the powers-that-be have already anticipated the break-up of the EU or at least the degradation of the euro. Perhaps such an occurrence will be used to bring pressure on world leaders to create a truly global currency. But even so, this must be seen as a secondary strategy more than an original plan.
Definitively, the great families and their enablers did not wish for the EU to fail, so far as one can tell. Its dissolution, were it to occur, will be no victory for them. In fact, it would be a most important and startling defeat, one that might have an extremely negative effect – not just on European unity but also on regulatory democracy and even on the central banking system. It might even signal the beginning of the end of the modern conspiracy to rule the world.