Posts
Merkel and Sarkozy are offering the economy of Greece as a sacrifice to German and French banking giants and even this is but one play in a Europe wide gambit. This is the unpalatable truth of the crisis that we see unfolding before us in the Eurozone.
Using historical precedent from South America and Asia it is quite possible to offer a couple of solutions to the Greek financial position as it stands today. Interestingly neither would beggar the population for future generations.
From the viewpoint of the German and French people it would be beneficial to them for Greece, and other countries that so spectacularly cannot yet manage their economies, to leave the Euro. The reputation of what has become a trading and minor reserve currency would shine and its value stabilise at a sensible level.
Think back, if you are old enough, to the misty financial practices that took place at the time of the formation of the Eurozone. Governments were encouraged to lie about their financial positions to gain access to the promised financial riches that awaited them in the Eurozone. The aim then was to cover as much of the map as possible in the single currency. It worked too! The downside story however is twofold:
On one hand the newly formed single currency did offer treasuries across Europe access to more money than ever before at lower interest rates than they had ever formerly been offered. Eager to show their people the benefits of the experiment, and I am sure against the advice of many treasury officials who recognized the folly, governments went on a borrowing frenzy. Money was available for projects that had previously been only a pipedream and the number of public sector workers grew.
At the formation of the Eurozone German bankers in particular and to a lesser extent the French were only too eager to lend any quantity asked for by the newly empowered governments. Bankers were in effect 'buying' sections of national economies. Bankers had never been happier 'lending' money 'created' at the touch of a button and receiving repayments in real money from the governments involved.
Increasing debt levels to the extent that they are unpayable is unconscionable to you or I. Accession governments did so however and one day there had to be a realisation moment.
It would be easy, and lazy, to lambast the politicians and bankers for their lack of foresight. To do so would be to underestimate them both spectacularly.
Across Europe there is a ruling political class of people from whom our political, academic and financial minds emerge. To them the promise of a united federal republic of Europe is a dream. Economic stability and military security could be more readily afforded to all of the people of Europe. The world would have a second major trading and reserve currency to rival the US Dollar, whose status as global reserve currency has irked said European ruling class since the abolition of the gold standard, and a completely new structure of laws could be enshrined to bestow cultural and social harmony to hundreds of millions of people.
The only problem for the ruling class is that they are limited in number and we live in democratic nations. Many millions have been spent to 'educate' populations to no avail. The majority of European citizens do not want a federal Europe. Another method had to be found.
Everyone presently is talking about the Greek economy and to some extent those of Portugal, Ireland, Spain and Italy also. Simply put they are all Eurozone nations that have borrowed far to much from bankers who demand payment. This is unsustainable and populations across Europe are waiting for deals to be done. The principles of these new deals I believe were set several years ago.
The preferred method of the ruling class is simply to voluntarily reduce debt burdens across the Eurozone to manageable proportions (they only owe it to themselves and it was only 'created' money anyway so nothing is really lost) in return for which full European Union will be the price demanded. The referendums, when they come, will be set across a backdrop of austerity and depression (financial and personal for those dependent upon the real economy) with the certain knowledge that the future will be just as bad for the next generation. Grateful populations will then have given up their very cultures and nation states to the dream of the ruling political, academic and financial class. Once the Greek population has been forced into negotiated bondage the other nations will follow. Populations of larger nations simply led to realise that if the periphery owes money to the centre and stops paying the centre collapses as well. Game over!
Not quite. There is still the possibility that the Greek people will be strong enough to force their government along a different path.
The timeline for European integration is medium term I believe so don't look for announcements in the next two or three years. Five at least would be my guess. Sufficient time to impress upon populations how limited their lives are going to be before offering the preferred alternative. Lots of colourful rhetoric to be absorbed before then.
I know not how strong the Greek people are. I shall watch from the sidelines with much interest.
I shall also do everything within my power to ensure that the UK ruling class does not force us into the maelstrom.
