Eurozone unemployment reaches new record … The seasonally-adjusted rate for April was 12.2%, up from 12.1% the month before. An extra 95,000 people were out of work in the 17 countries that use the euro, taking the total to 19.38 million. Both Greece and Spain have jobless rates above 25%. The lowest unemployment rate is in Austria at 4.9%. The European Commission's statistics office, Eurostat, said Germany had an unemployment rate of 5.4% while Luxembourg's was 5.6%. The highest jobless rates are in Greece (27.0% in February 2013), Spain (26.8%) and Portugal (17.8%). In France, Europe's second largest economy, the number of jobless people rose to a new record high in April. − BBC
Dominant Social Theme: This unemployment is horrible and Brussels must do something about it.
Free-Market Analysis: In today's lead article we commented that top Eurocrats were backing away from the harshest measures of "austerity" – higher taxes and regulations, lower benefits and services – for fear of stoking a revolutionary trend among Europe's Southern PIGS.
This is not our description: "revolution" and "rebellion" … these terms are being utilized at the top levels of the German sociopolitical discussion, and if they are circulating there, you can be sure they are being uttered in Brussels.
This article shows us quite clearly what we have also observed: That the palliation of Europe's desperate masses must go hand-in-hand, from Brussels's point of view, with a deeper political union. It is indeed a balancing act, but one that the Eurocrats are loathe to abandon.
So they will relieve the pressure on the masses, on the one hand, and continue with their goal of a deeper political union on the other. Here's more from the BBC article:
"We have to deal with the social crisis, which is expressed particularly in spreading youth unemployment, and place it at the centre of political action," said Italy's President Giorgio Napolitano. In the 12 months to April, 1.6 million people lost their jobs in the eurozone. While the jobless figure in the eurozone climbed for the 24th consecutive month, the unemployment rate for the full 27-member European Union remained at 11%.
The eurozone is in its longest recession since it was created in 1999. At 1.4%, inflation is far below the 2% target set by the European Central Bank (ECB). Consumer spending remains subdued. Figures released on Friday showed that retail sales in Germany fell 0.4% in April compared with the previous month. Earlier this week, the Organisation for Economic Co-operation and Development (OECD) predicted that the eurozone economy would contract by 0.6% this year.
According to Carsten Brzeski, an economist at ING, in the past, the eurozone has needed economic growth of about 1.5% to create jobs. ECB action? Some consider that the ECB needs to do more than simply cutting interest rates to boost economic activity and create jobs. Earlier this month, the ECB lowered its benchmark interest rate to 0.50% from 0.75%, the first cut in 10 months, and said it was "ready to act if needed" if more measures were required to boost the eurozone's economic health.
In its report earlier this week, the OECD hinted that the ECB might want to expand quantitative easing (QE) as a measure to encourage stronger growth. Nick Matthews, a senior economist at Nomura International, said: "We do not expect a strong recovery in the eurozone. "It puts pressure on the ECB to deliver even more conventional and non-conventional measures," he added. The European Central Bank is due to meet next week.
You see where this is headed? Read the last two grafs in this excerpt and note how the BBC takes the extraordinary activism, suggested and otherwise, of the ECB as a given.
What was never to be – the idea that the ECB would do more than enforce its mandate of euro stability – has turned into an all-out campaign to insure that the ECB turns into the employment provider of last resort for damaged PIGS economies.
Eventually, we figure the political class of France will add its voice to the din for ECB activism and in doing so all but guarantee that the ECB evolves from a static entity guarding the sanctity of the euro into an activist entity that like the Federal Reserve can do pretty much whatever its officials decide.
Lost in this evolution will be the aghast German onlookers, the citizens of that twice destroyed country who had hoped the EU would act as a bulwark against more war and destruction. Instead, we find the Germans again in the proverbial crosshairs, for it will be their savings that the ECB will debase to raise the fortunes of the rest of Europe.
Leave aside the issue of maintaining a balance between desperation and "deepening" – another issue of significant import is the reaction of the average German to this manipulation (and draining) of their prosperity.
Once the Eurocrats have gained their goal of a more activist Brussels and ECB, they will then have to confront an issue that is just as fundamental: the anger of the German people over an evident and obvious betrayal.
By then it will be clear to almost all onlookers that the EU has over-spilled the banks of its authority. And thus if the Eurocrats do manage to stabilize Europe on the backs of the Germans, they will then doubtless be held to account for it, one way or another.
Germany sits at the center of this convoluted misery, like a groggy bird enmeshed by a dynamic and demented but formidable spider. Watch out if she spreads her wings!
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