Submitted by Pater Tenebrarum – The Acting Man Blog
Never let a Crisis go to Waste
As is well known, the EU’s socialist centralizers and “harmonizers” have always fully expected the adoption of the euro to lead to a crisis that would allow them to push through policies that would otherwise never have seen the light of day. Italian socialist and former EU Commission president (i.e., chief commissar) Romano Prodi told the Financial Times in 2001:
“I am sure the euro will oblige us to introduce a new set of economic policy instruments. It is politically impossible to propose that now. But some day there will be a crisis and new instruments will be created.”
Montgolfière – engraving by Claude-Louis Desrais, 1783
Of course it wouldn’t be a problem for the EU to use a common currency if it consisted of a sound, market-chosen money. It is only a problem and was always likely to produce a crisis because it is a central bank-administered fiat money the supply of which can and has been expanded willy-nilly.
The current rate of expansion of the euro zone’s true money supply has hit nearly 14% annualized. This is utterly crazy, particularly when considering what happened after the last major money and credit expansion – via ECB, click to enlarge.
Once the predictable crisis inevitably broke out, a flurry of centralization measures indeed ensued. A number of governments which had either spent money beyond their means or experienced soaring deficits due to the economic bust effectively lost their fiscal sovereignty, while tax payers across the euro area had to pick up the tab.
In the course of all this, one of the battle cries continually repeated ad nauseam by the political elite was “we need more Europe!” – by which they mean, more political power must be centralized in Brussels. Not surprisingly – in view of the historical record – the proposals of French socialists have gone the farthest.
Never mind that voters appear increasingly convinced of the exact opposite – even in Austria, which has sidestepped the crisis relatively unscathed (apart from a few rather staggering bank insolvencies), a recent citizen’s initiative in favor of exiting the EU gathered more then 260,000 signatures to everybody’s vast surprise. This forces the country’s parliament to discuss the issue and although absolutely nothing will come of it, it shows that the serfs are getting increasingly antsy.
More Government and More Debt Needed …
In mid July, French president Francois Hollande – a.k.a. the “welfare state incarnate” (h/t Gaspard Koenig) – came right out and demanded the institution of a “EU government”:
“French President Francois Hollande called on Sunday for the creation of a euro zone government and for citizens to renew their faith in the European project, which has been weakened by the Greek crisis.
Reviving an idea originally put forward by former European Commission chief Jacques Delors, Hollande proposed “a government of the euro zone (with) a specific budget as well as a parliament to ensure its democratic control”.
The French president said the 19 member states of the euro zone had chosen to join the monetary union because it was in their interests and no one had “taken the responsibility of getting out of it”.
“This choice calls for a strengthened organization, an advance guard of the countries who will decide on it,” he said.
The euro zone’s members are currently united in the informal body the Eurogroup, which comprises each country’s finance minister, presided over by Dutch Finance Minister Jeroen Dijsselbloem.“What threatens us is not an excess of Europe but its insufficiency,” Hollande wrote in an op-ed in the Journal du Dimanche weekly newspaper.”
It is probably not necessary to point out that so-called “democratic control” is little but a comforting illusion. Still, it is quite amusing that the French president apparently thinks that yet another layer of government and bureaucracy will somehow “save Europe”. More likely it will lead to more sheep shearing – to the extent that any sheep worth shearing are still left.
Hello there … the shears are being sharpened.
Photo credit: AFP
Now French economy minister Emanuel Macron has added his two centimes, essentially confirming that sheep shearing exercise is planned. He wants to create an “EU budget” by, you probably guessed it, issuing debt. As he avers, tax payers needn’t be bothered for forcible contributions that way – but only for the moment:
“A common euro zone budget should initially be funded through joint debt issuance and taxpayers’ money should only be used at a later stage, French Economy Minister Emmanuel Macron said on Saturday. France wants the euro zone to have its own joint budget to carry out investments.
Macron, in an interview with a German newspaper this week, proposed giving a new commissioner powers to coordinate economic policy across the single currency bloc and preside over fiscal transfers between its 19 members.
The idea has met opposition in Germany with Vice Chancellor Sigmar Gabriel asking for more details and saying he was strictly against a “euro tax, or a value-added tax” to fund a common budget. Germany has also traditionally opposed the idea of shared debt issuance, fearing it would encourage fiscal profligacy in weaker euro zone members.
Macron said financing the shared budget through taxes from the onset would slow down the project. “For me it should be the first step of a euro zone budget: raising money with a joint liability,” he told a press conference at the Ambrosetti business forum in northern Italy.
He expressed confidence a mechanism could be agreed to “raise money together for new proposals, new projects and dealing with euro zone issues.”
“As a second stage we have to raise taxes or share taxes. I think it more efficient not to make it a precondition for the euro zone budget otherwise it will take a lot of time,” he said.”
The chutzpa of these parasites is truly stunning. What’s French for “f*** you and the horse you rode in on”? (We’re not in a mood to be polite about it. This highway robber has to be denounced with the appropriate verve). Amazingly, he openly admits that he wants to pull the wool over people’s eyes by first issuing debt and then taxing them for it later.
Emanuel Macron – to summarize his stance: He wants more government, more taxes and more waste of scarce capital.
Photo credit: Alain Jocard / Reuters
EU directed “investments” do nothing but erect white elephants and feed cronies. They impoverish everybody else. Even the EU member states with the “best reputation of being responsible stewards of EU funds” have nothing to show for these investments except “ghost airports” and similar things, that are set to produce additional losses (in excess of the already sunk, i.e., completely wasted capital) in perpetuity – or at least until the whole shebang comes crashing down.
It cannot be otherwise – whenever the bureaucracy “invests”, it means ipso facto that the projects concerned are not economically viable – otherwise the private sector would have undertaken them already. Resources are however scarce, and this ensures that more urgent consumer wants will perforce remain unsatisfied.
The token resistance voiced by the German socialist mentioned in the excerpt above is amusing, but is also shows that the last bastion of actual “democratic control” consists of the subsidiarity principle. The man is voicing displeasure with the idea because he has to think about his voters, who are among the chief payers and guarantors of assorted European bailouts to date. Fiscal transfers will go down like a lead balloon with them.
However, whenever such “trial balloons” are launched in the press, one needs to be aware that they represent the actual long term plan – i.e., it is what they really want. They’re just testing the waters, to see if there’s an outcry.
At the moment, the French proposals for more government, more taxes, fiscal transfers and more bureaucratic waste (renamed “investment”) are probably still “politically impossible to implement”, to use Mr. Prodi’s turn of phrase. If history is any guide, that won’t keep the centralizers from trying – and so far, they have usually ended up getting what they wanted.