ECB risks its reputation and a German backlash over mass bond purchases … The European Central Bank risks irreparable damage to its reputation by agreeing to the mass purchases of southern European bonds in defiance of the German Bundesbank and apparently under orders from EU leaders. Jean-Claude Trichet (left), the ECB's president, denied there had been any political interference. "We are fiercely and totally independent," he said. It is clear, however, that the two German members of the ECB's council voted against the move, a revelation that may cause a catastrophic political backlash in Germany? – UK Telegraph
Dominant Social Theme: Germany must do as it's told?
Free-Market Analysis: It is very interesting to watch human history unwind. For one thing, if you pay close enough attention in this era of the Internet, it's hard to avoid the conclusion that most history seems to be ginned up by the power elite in pursuit of greater global integration. The current EU crisis is right in line with that thought, but what's going on, as evidenced by the above article excerpt, shows us that something new may be taking place as well, on a more mundane level (as regards the EU, anyway).
Yes … it would seem that the truth-telling of the Internet and the refusal of an beleaguered power elite to back down from any of its plan for world-domination seems to be generating problems that are increasingly infecting the EU generally. In fact, we wouldn't be surprised if a significant collision between the dominant social theme of the EU (Europe needs integration to prevent World War III) and millions of common people in everyday walks of life is about to occur.
In this article, therefore, we will analyze the ways that the copious and ruinous bailouts of the EU may have contributed to such a collision, and possibly laid the groundwork for it. We are not convinced, as we have pointed out many times before, that the elite is thoroughly in charge of events and that everything going on today has been painstakingly planned. We see too much evidence throughout history that, "The best laid schemes o' Mice an' Men, Gang aft agley." And that goes for the power elite as well.
Of course, it often seems as if the power elite, with its money and power, is unstoppable. And yesterday, we analyzed why promoting the EU, and ensuring its continuity, was most important to the power elite. But we also mentioned that the moves made by the EU and its central bank of late probably worked against the goal of the EU's continued substantive unity. Below, we examine these issues in more detail.
The EU has presented itself with great probity when it comes to financial matters. But the general determination to fling literally trillions of euros at those who would exploit the profligacy of the EU's Southern flank strikes us a kind of madness – a rebuttal to what has come before. Those who lead the EU have spent 50 years in a tortuous effort to promote European unity. In the past week, we think they have started to decimate what took so long to build and was so endlessly (and annoyingly) promoted.
In retrospect, of course, the pushback started with the Greeks. But now following these latest rash actions it may be seen as spreading to the Germans. Only a few days ago we analyzed a Telegraph article that stated the German "red line" regarding Europe would be crossed if the EU central bank started printing money out of thin air to buy the government bonds of bankrupt countries such as Greece, Spain, etc.
Now, according to the Telegraph, that red-line has been breached and then some. In this regard, the important sentence from the Telegraph article above is, "The European Central Bank risks irreparable damage to its reputation by agreeing to the mass purchases of southern European bonds in defiance of the German Bundesbank and apparently under orders from EU leaders."
Actually, we can't keep track of how many red-lines have been breached, or are about to be breached, by the recent behavior of desperate EU-crats. We have noted in the past the EU Central Bank's determination to keep interest rates high and money printing low compared to the rest of the world, including America and King Dollar. Thus, the way the EU and its central bank have been behaving recently is especially surprising. The EU reminds us of a former alcoholic that doesn't take a drink for 20 years and then suddenly and deliberately goes on a huge bender. The EU and its leaders are borrowing huge amounts of money, leverage more – and what they cannot borrow or beg they are simply going to print from nothing.
And the poor Germans! In the past century, Germany (and other parts of Europe as well) have felt the indescribable pain of out-of-control price inflation. The ancestors of those alive today watched their savings shrivel to nothing, heated their houses by burning worthless currency in their fireplaces, and rolled wheelbarrows of depreciating cash down to the grocery story to buy a loaf of bread. And now EU leaders, including Germany's own Frau Merkel, are asking them to start up the process once again! No wonder Merkel's party just lost an election in the heart of Germany's industrial belt. We think the Germans are increasingly up in arms over what's going on in Europe. And they may not be the only ones.
The Greeks as we've documented numerous times by now are deeply angered as well. We know there's a temptation (we get the feedbacks) to view the Greeks as spoiled-rotten socialists who've gotten what's coming to them. But as we've reported several times, this may be a somewhat facile interpretation of what's occurring. The Greeks, in our estimation, are truly and powerfully aggrieved. This is very important to understand if we are to comprehend the unraveling of this dominant social theme (the importance of EU centralization and the euro.)
If the Greeks are merely in a spoiled snit, the social unrest won't last long and won't spread. But if the Greeks grievances are what we think they are – and as deeply felt as we believe they are – then the simmering anger is bound to be shared by other EU countries as well, those who will soon share Greece's predicament.
This goes well beyond many of the hypothetical difficulties that the EU has foisted on its bleeding constituencies – the rotten EU constitution that was rejected even by France, and the constant arm-twisting of the EU's bureaucratic thugs when a nation voted (as, say, Ireland did) the "wrong" way. The abrogation of the social contract, the whittling away of living standards, may be seen as deeply concerning to Greece and other Southern European countries. And time will tell.
But now there are other questions. Now the EU is boldly crossing those "bright red lines" so far as Germany is concerned. And the fear that has infected the Greeks is likely to have been triggered there as well. No one is really writing about this that we can see, not even in the alternative press. But it is of FUNDAMENTAL importance, certainly from an investment standpoint if not a sociological one. If it is taking place, it is certainly not hypothetical. It would be a real and visceral fear that the economic viability of European nation-states is being compromised. The Greeks may worry about what "austerity" will do to their already thin paychecks. The Germans could well be worried about what price-inflation will do to theirs.
We have mentioned in the past (just yesterday as a matter of fact) the idea that the EU is actually a German (Nazi) product. There was a huge article in a major British newspaper several years ago that made this case in excruciating detail. And hypothetically the idea sounds good. But in reality, as we've pointed out lately, Germany is not today what it was 70 years ago. It is a successful nation state with a vast pool of mid-sized entrepreneurial companies supplying much of Europe with industrial goods. These successful businesspeople have a great deal of clout and we are not sure they are sentimental about the Third Reich. In fact, for the most part we are sure they are not.
These Germans – and most of Germany as a matter of fact – would probably fear price inflation more than they would the fall of the euro. Merkel's strange determination (which has likely already ruined her political career) to drag Germany into an increasingly unstable currency arrangement with the prospect of endless, uncapped bailouts looming has now hit an electoral wall that would seem to show the truth of this analysis. We would be surprised if there is not more pushback to come.
All this confirms what seems increasingly obvious: The EU is not of ultimate importance to Germany (no matter what Merkel says) but has, in fact, always been an Anglo-American affair. It could not be otherwise because the fundaments of the EU would not have been erected, post World War II if the British and Americans had wished to undermine them. In fact, it suited the Anglo-American elite's ambitions (shared by certain elite banking families in Europe to be sure), which were – and still are so far as we can tell – to build an increasingly centralized world government.
Ironically, (as an aside, but we can't resist) the other influential player in all this turns out to be France. While the French elites at the very top may be working in league with elements of the Anglo-American power elite (and therefore against their own countrymen), many French in leadership positions probably see the EU as a counterbalance to the Anglo-American axis. Additionally, many French may have seen the EU as a way to rein in Germany. All of this is naïve. The EU, if it continues long enough, is a dagger aimed at the French throat as much as any other. The regulatory despotism that colors the black heart of Europe has not yet been given full expression. Many in the French mid-level bureaucracy are likely currently ruing the problems of the EU. They should not.
So much angst! So many problems! When history is written a long time from now (if anyone bothers) the whole of the past two centuries at least will be seen as one long quest by certain powerful people to centralize the Western world's power and wealth in their hands. To this end, they fomented unthinkable wars, created vast global, promotional networks that combined regulatory, media and academic elements and generally kept a steady stream of fear-based dominant social themes aimed at the larger populace.
All that may be changing now, as we regularly note. In fact, the announcements of EU leaders and its central bank may have done to Germany just what the IMF/EU austerity pact has recently done to Greece – inflame the fears of citizens not just for their lifestyles, but for their very survival.
We do not know how this epic struggle will be resolved. But we do know that the EU's recent actions in supporting its Southern flank may now have jeopardized its Northern one as well. Perhaps all will be well, but we've never been especially bullish on this flawed version of Charlemagne's empire – not even after the trillion-dollar bailout announced yesterday. The "market euphoria" following those financial moves took about 24-hours to wear off. Now, we would venture, the EU, or at least the euro, faces a hangover and an increasingly uncertain future. The Internet, for better or worse, will help chart its course.