News & Analysis
Does Startling Der Spiegel Article Indicate the End of the Euro Crisis?
Euro-Crisis Hope Confidence in European Banks Is Returning ... There is cause for hope in Southern Europe. New numbers indicate that trust is returning to banks located in countries that have been hit hardest by the euro crisis. But even as discrepencies in the Continent's Target2 payment system shrink, danger still lurks. The turning point came almost exactly four months ago. On Sept. 6, 2012, 22 men gathered on the 36th floor of the European Central Bank building in Frankfurt to reach a momentous decision on the Continent's common currency. The euro, said ECB President Mario Draghi at the press conference following the meeting, is "irreversible." To save it, he added, his bank would undertake unlimited purchases of sovereign bonds should it become necessary. – Der Spiegel
Dominant Social Theme: The problems are over now. Good thing the EU foundered.
Free-Market Analysis: We are suspicious of this sudden discovery that the European crisis has lessened. Der Spiegel, an elite mouthpiece if there ever was one, is virtually announcing it.
But here is what inquiring minds want to know: Is the article accurate? And why would Der Spiegel's editors want to announce such positive news now?
Bear with us, dear reader, as we try to explain.
It is important, first of all, to understand the rhetoric that surrounds us. It is issued, in our view, by a power elite that wants to consolidate its sway over the entire world, or at least chunks of it. The top elites try to manipulate people into giving up power and control to globalist institutions via fear-based memes. Investors need to sort through these memes to figure out what the ramifications are.
Sometimes a dominant social theme presages a successful promotion that can generate great profits (regardless of whether or not one "agrees." On other occasions, especially as what we call the Internet Reformation matures, these dominant social themes are misfiring.
Plenty of people have lost lots of money by investing in various global warming themes. The information provided by the Internet Reformation allows people to push back against various elite manipulations.
In the 20th century, these manipulations were almost inevitably concluded successfully. In the 21st, not so certainly.
And thus it is instructive to look at this Der Spiegel article.
There is no doubt that the crisis has aided top Eurocrats in their quest to solidify rule over Europe's disparate nation-states. In fact, this was the plan, according to legitimate quotes from senior EU historical figures. We and others have written about this in the past.
The idea was that the EU would need a severe monetary crisis that would drive it toward a stronger political union. This might have been why the euro was pursued with such great vigor. Without the imposition of the euro there could be no substantive and lingering financial crisis.
And without a financial crisis, there could be no action taken to enact Draconian legislation that would turn a relaxed trade union into a tightly knit "empire."
When we examine what has occurred since we can see that the EU has acquired considerable power relative to where it was before.
- The EU central bank can virtually issue money at will now.
- Countries like Greece, having illustrated fiscal incompetence, have virtually lost their sovereignty and are being run out of Brussels.
- As a result of the stresses and strains on the Union, the EU is gradually turning into a two-track entity, with the majority of countries acquiescing to tighter central rule while a few like Britain move in the other direction.
What is also true is that portions of the EU are most dissatisfied as a result of the economic crisis and secessionist talk has been rising. Here's an excerpt from a New York Times article on the subject:
Europe's Richer Regions Want Out ... Catalonia may be the catalyst for a renewed wave of separatism in the European Union, with Scotland and Flanders not far behind. The great paradox of the European Union, which is built on the concept of shared sovereignty, is that it lowers the stakes for regions to push for independence.
While a post-national European Union may be emerging out of the euro zone crisis, with a drive for more fiscal union and more centralized control over national budgets and banks, the crisis has accelerated calls for independence from member countries' richer regions, angry at having to finance poorer neighbors.
Artur Mas, the Catalan president, recently shook Spain and the markets with a call for early regional elections and promised a referendum on independence from Spain, although Madrid considers it illegal. Scotland is planning an independence referendum for the autumn of 2014. The Flemish in Flanders have achieved nearly total autonomy, both administrative and linguistic, but still resent what they consider to be the holdover hegemony of the French-speakers of Wallonia and the Brussels elite, emotions that will be on display in provincial and communal elections Oct. 14.
There are countless things that hold unhappy countries, like marriages, together — shared history, shared wars, shared children, shared enemies. But the economic crisis in the European Union is also highlighting old grievances.
Surely the top Eurozone officials shuddered to see such dissatisfaction in black and white. Every effort is being made to hold the Union together, and the economic crisis had been used effectively to this end. Was it possible, however, that things were threatening to get out of hand?
Was it possible that the centralizing benefits of the EU were about to be overwhelmed by a wave of secessionist efforts? And if so, what could be done? ...
Now suddenly comes news that the European Crisis is being alleviated. Der Spiegel is nearly euphoric over the sharp turnaround:
Since then, an amazing thing has happened. Although the ECB has yet to embark on any such bond shopping sprees, countries such as Italy and Spain, at risk of being engulfed by the crisis, no longer have to pay the horrendous interest rates they did in the middle of 2012. Furthermore, the massive imbalances that have recently plagued the European banking system have shrunk, if only slightly.
As recently as the summer of 2012, investors and those with savings accounts in crisis-stricken countries were moving their money out as quickly as they could. Billions of euros were withdrawn from accounts in Greece and Spain and banks in stable countries such as Germany put a cap on the amount of money they were willing to lend business partners in countries hit hardest by the euro crisis.
But since last autumn, this trend has come to a stop. Indeed, the most recent numbers indicate that a slight reversal is underway, with ECB statistics showing that deposits in Spanish and Greek banks have recently ticked upwards. Furthermore, Germany's central bank, the Bundesbank, reported this week that imbalances in Europe's so-called Target2 settlement system, in which euro-zone central banks and the ECB transfer money across the common currency union, have declined. As the euro crisis progressed, the system had become massively imbalanced, which could result in massive losses for countries such as Germany should Greece, for example, be forced to exit the euro zone.
This sudden trend, according to Der Spiegel, is a "Cause for Hope"?
Being far more cynical than the Der Spiegel editors, we wonder if a decision has been taken at the very top to "scale back" the crisis before it ended up in determined separatist movements. Of course, to accept this analysis, one would have to accept as well that the crisis is at least in part a phony one, concocted or at least sharpened by Euro-elites determined to drag out the crisis for maximum centralizing benefit.
This is our suspicion, though we cannot prove it, of course. But if indeed the EU has turned the proverbial corner, we'd find the timing to be both convenient and ... coincidental
Conclusion: Our question then becomes: Has a decision been taken at the topmost halls of EU power to defuse this endless crisis? That would be big news indeed.
Posted by dave jr on 01/11/13 05:57 AM
Europe, the Americas, Asia; little by little, step by step, progressively. They will perpetuate crises somewhere. The result is always the same. Loss of independence and new laws to keep it that way.
Posted by Danny B on 01/10/13 11:21 PM
BONEHEADS in Brussels.
The CAPEX says that there is no recovery.
Click to view link
While the financial sector might keep it's head above water for a while longer, there will be NO recovery in employment.
Employment and production are DEAD.
Click to view link
There is no saving either one.
So, while bond cost may go down, there will never be an increase in productivity to pull the general economy out of the doldrums. Japanization is the future of the Eurozone. No amount of magic announcements will provide jobs for the southern countries. France is just waiting for an excuse to blow all to hell. When that happens, all the happy-talk from Baboso in Brussels will come to an end. Too many payasos on the payroll.
Posted by LauranF on 01/10/13 08:11 PM
Europe's financial state is like a vast party with free food and booze everywhere... primarily hosted by Germany. When the free champagne no longer flows ..(Merkel cuts it off)... ... ... ..the guests will leave and they will go looking for more "hosts". When they find none; the rioting will start again!... .let not that thought go wasted on the United States as we run periously into the same thing that Greece and Spain now enjoy..there is not enough money that can be printed to cancel all the debt accumulated in Europe... ... .
Posted by taxesbyanyothername on 01/10/13 06:27 PM
Difficult to believe they believe anyone will believe.
Posted by Frank on 01/10/13 04:20 PM
Bottom line is this: either Europe's strongest economies (especially Germany) is willing to subsidize the worst economies (like the PIIGS) & thereby transfer German wealth to prop them up, or the Euro collapses. In the short run, it might work. But in the long run, it won't work as the average German will eventually refuse to subsidize other nations. Germany could subsidize the PIIGS by either increasing taxes on its citizens to pay for the buying of debt from the PIIGS, or by running the printing presses and "paying for it" that way, which will cause more inflation. Either way, the average German loses.
The Euro crises has not ended.
Posted by Saffire29979 on 01/10/13 01:23 PM
ZeroHedge's take on this is interesting - Click to view link
Economist Hans-Werner Sinn thinks this trend-reversal is an indication that the debt crisis is starting to eat its way further into the core Eurozone countries. This wouldn't be a cause for celebration, but a cause for greater alarm.
Reply from The Daily Bell
Yes, thanks, we were aware of the article. But they CAN "defuse" the (banking) crisis by shifting the burden to the taxpayer.
They can simply print money, which they are starting to do. The question then becomes whether taxpayers will stand for it ....