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Posts Tagged ‘Herman Van Rompuy

Europe’s Coming Meltdown

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from The Daily Bell
Originally posted March 15, 2011


Total German triumph as EU minnows subjugated … The Iron Chancellor of Germany could not have been clearer. “Whoever wants credit must fulfill our conditions”. Chancellor Angela Merkel (left) has agreed to cut the interest rate on the EU share of Greece’s €110bn loan but this does not restore solvency. These conditions are capitulation by three vulnerable states on core policies, and partial loss of sovereignty for the rest of the eurozone. For Greece, the terms are a fire-sale of €50bn (£43.2bn) of national assets within four years, a tenfold increase from the original €5bn that premier George Papandreou thought he signed up to a year ago. When the IMF first mooted this sum last month he told the inspectors not to “meddle in the internal matters of the country.” State holdings in Hellenic Post, Hellenic Railways, Athens Public Gas, the Pireaus port authority, Athens airport, Thessaloniki water, and ATEbank, to name a few, will not fetch more €15bn. What next? – UK Telegraph

Dominant Social Theme: The Germans are being quite reasonable. Frau Angela Merkel is benevolent.

Free-Market Analysis: The just-completed deal between North and South Europe (between Germany and the PIGS, really) is apparently almost entirely one-sided and bound to inflame not diminish civil unrest as spring begins to bloom across Europe. The lines of battle are not hardening; they look to have been set in reinforced concrete. In such an environment it would seem continued clashes within the affected countries are inevitable. Have you read this elsewhere? Here’s one interpretation from the European Voice:

Herman Van Rompuy, the president of the European Council, declared that the eurozone leaders had resolved their differences over economic governance in time for the EU summit at the end of the month. A pact on competitiveness – which demands greater policy convergence between the eurozone states – has been agreed. In addition there are agreements in principle on boosting the effective lending capacity of the eurozone’s bail-out funds – both the temporary arrangement, the European Financial Stability Facility (EFSF), and the permanent mechanism that will come later, the European Stability Mechanism (ESM).

Van Rompuy was speaking in the early hours of Saturday morning (12 March) at the conclusion of a meeting of the heads of state and government of the eurozone. Van Rompuy said that all 17 leaders of the eurozone countries agreed that their economies needed to be more competitive and more convergent. The pact would help achieve that, he said. Eurozone governments would make their first pledges at the end of this month as to what action they were going to take at a national level to help the eurozone. “What has changed is the political commitment,” he said. Nicolas Sarkozy, the French president, hailed the pact as a “decisive step forward”.

Sarkozy and Von Rompuy may be satisfied, but we would suggest that some others are not, including the heads of certain besieged Southern PIGS. The current state of affairs, in fact, is entirely in keeping with what we’ve been predicting for the past year or so. Europe’s Southern tribes put up with the EU and especially the euro so long as it provided additional prosperity; but there is no benefit to these countries now, only eroded sovereignty and punishing austerity. The social compact has been breached and we wonder how long it will be before the debt will be rendered to Europe’s spendthrift Northern banks in blood and bone rather than fiat paper – no matter Brussels’ happy talk.

The Europhile Financial Times – of all papers – recently carried a hard-hitting editorial on the subject by Gideon Rachman. It was entitled, “Merkel’s nightmare: the voters’ revenge,” and to read it is to realize how far Europe has traveled from two years ago when Eurocrats were so dismissive of European pushback to the new EU Constitution that they forced the language through by treaty, even demanding the Irish vote twice to ensure the changes were adopted. Here’s an excerpt from Rachman’s editorial:

In the new economic and political climate inside the EU, none of the key national governments feels it has any room for manoeuvre. On both sides of the euro divide, centrist governments are worried about the rise of nationalist and extremist parties. That makes it much harder to reach EU agreements, which worsens the economic crisis, which then worsens the political crisis. Germany is the key country pushing for tough, structural economic reforms across the eurozone. Its proposals have been made with France. But the hardline strictures on debt, deficits and later retirement ages, agreed in last weekend’s euro pact, are very German in inspiration …

[In the Netherlands] … the rightward drift of Dutch politics has continued. The Party of Freedom of Geert Wilders, which is strongly opposed both to Muslim immigration and to the EU, is now a major force in Dutch politics. The German chancellor knows that anger about the EU and about immigration are also potent forces in her own country. Mr Wilders has spoken to enthusiastic audiences in Germany and the thought of a German Wilders is Ms Merkel’s ultimate nightmare … The trouble is, to fend off the threat of political radicalisation in Germany, Ms Merkel is demanding austerity policies in countries such as Greece that pose a long-term risk to their political stability. European leaders do not know whether to be more frightened of the bond markets or of their own voters.

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“The Euro game is up… Just who the hell do you think you are? You are very dangerous people”

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by Tyler Durden
Posted Zero Hedge on Nov 25, 2010

FAMOUS EUROSCEPTIC NIGEL FARAGE, IN JUST UNDER FOUR BRIEF MINUTES, tells more truth about the entire European experiment than all European bankers, commissioners, and politicians have done in the past decade. As we have already said pretty much all of this before, we present it without commentary:

“Good morning Mr. van Rompuy, you’ve been in office for one year, and in that time the whole edifice is beginning to crumble, there’s chaos, the money’s running out, I should thank you – you should perhaps be the pinup boy of the euroskeptic movement. But just look around this chamber this morning, look at these faces, look at the fear, look at the anger. Poor Barroso here looks like he’s seen a ghost. They’re beginning to understand that the game is up. And yet in their desperation to preserve their dream, they want to remove any remaining traces of democracy from the system. And it’s pretty clear that none of you have learned anything.

When you yourself Mr. van Rompuy say that the euro has brought us stability, I supposed I could applaud you for having a sense of humor, but isn’t this really just the bunker [or banker] mentality? Your fanaticism is out in the open. You talk about the fact that it was a lie to believe that the nation state could exist in the 21st century globalized world. Well, that may be true in the case of Belgium who haven’t had a government for six months, but for the rest of us, right across every member state in this union, increasingly people are saying, “We don’t want that flag, we don’t want the anthem, we don’t want this political class, we want the whole thing consigned to the dustbin of history.”

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The horrible truth starts to dawn on Europe’s leaders

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by Ambrose Evans-Pritchard
London Telegraph: Last updated November 16th, 2010

Survival crisis? A newspaper seller in Dublin on Monday

The entire European Project is now at risk of disintegration, with strategic and economic consequences that are very hard to predict.

IN A SPEECH THIS MORNING, EU PRESIDENT HERMAN VAN ROMPUY (poet, and writer of Japanese and Latin verse) warned that if Europe’s leaders mishandle the current crisis and allow the eurozone to break up, they will destroy the European Union itself.

“We’re in a survival crisis. We all have to work together in order to survive with the euro zone, because if we don’t survive with the euro zone we will not survive with the European Union,” he said.

Well, well. This theme is all too familiar to readers of The Daily Telegraph, but it comes as something of a shock to hear such a confession after all these years from Europe’s president.

He is admitting that the gamble of launching a premature and dysfunctional currency without a central treasury, or debt union, or economic government, to back it up – and before the economies, legal systems, wage bargaining practices, productivity growth, and interest rate sensitivity, of North and South Europe had come anywhere near sustainable convergence – may now backfire horribly.

Jacques Delors and fellow fathers of EMU were told by Commission economists in the early 1990s that this reckless adventure could not work as constructed, and would lead to a traumatic crisis. They shrugged off the warnings.

They were told too that currency unions do not eliminate risk: they merely switch it from currency risk to default risk. For that reason it was all the more important to have a workable mechanism for sovereign defaults and bondholder haircuts in place from the beginning, with clear rules to establish the proper pricing of that risk.

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EU Confrontations Continue

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from The Daily Bell
Friday, October 08, 2010

ECB Economic sanctions? Yes, please … Brussels wants to delve deep into the running of national economies. It should beware of digging too far … THEY came to Brussels this week in their tens of thousands, from Finland to Greece, to say no to austerity. Their message was simple: the poor and the workers are being made to pay for the sins of the bankers and the speculators. To judge from some banners, they may have a new category of enemy: Eurocrats. Jose Manuel Barroso, president of the European Commission, keeps saying that the days of stimulus spending are over; now is the time for budget cuts. To ensure that members of the European Union maintain fiscal discipline, he proposed on September 29th stern new measures to give the commission power to scrutinise their budgets and impose hundreds of millions of euros’ worth of penalties on the profligate. Even those that pig-headedly refuse to reform their economies could be punished. – Economist

Dominant Social Theme:
The EU may be moving too fast but it is for the good of everyone.

Free-Market Analysis:
It is sometimes a little wearying to follow the ins and outs of the austerity measures being pushed in Europe, because from our point of view they increasingly are a kind of pre-scripted affair. They do give rise to the idea that those behind the EU knew perfectly well that sooner or later there would be a swift and terrible downturn in the Eurozone. Sub dominant social theme: “This is the way things happened and now we all need to pull together and reimburse the banks.”

There are of course plenty of skeptics in the EU community that believe austerity is a necessary part of the economic landscape at this point because many citizens in the PIGS had grown greedy; the benefits they were receiving from the government were therefore undeserved and unsupportable. Others believe that austerity is merely a way to ensure that Europe’s and America’s big banks are reimbursed.

We have taken the position that the EU did not fully expect the ferocity of the downturn, nor the impact of having it basically play out over the Internet. The stresses and strains were such, so far as we can tell, that France came near to pulling out of the EU over an argument with Germany regarding the creation of an EU-wide fund that would work in partnership with the IMF to ensure that no EU countries went bankrupt.

It is no doubt true that those running the EU expected a downturn. It is no doubt true that there was a plan to introduce what is now called austerity as well. This must be the case as the EU process has essentially been revealed as one of glorified payola. The political and industrial leaders of various EU countries were virtually bribed with boatloads of EU funds that were paid upfront supposedly to settle governmental debts that would bring national affairs into balance with EU financial requirements.

Of course nothing of the sort occurred. The money was booked and the books were balanced, but the real cash found its way into the pockets of those leaders who then campaigned hard for their respective countries to join the EU. Several years later (yesterday and today), it becomes very clear that the funds were not really applied as they should have been. But conveniently, the damage is done. The PIGS are part of the EU along with their burgeoning debts.

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