STAFF NEWS & ANALYSIS
Schroeder Writhes as EU Waits for German Court to Decide Fate
By Staff News & Analysis - September 06, 2011

Former German chancellor Gerhard Schroeder on Sunday called for the creation of a "United States of Europe," saying the bloc needed a common government to avoid future economic crises. Schroeder, a Social Democrat who ran the country from 1998 to 2005, said in an interview with Der Spiegel that European Union leaders were wrong to expect the euro to drive the bloc on its own. "The current crisis makes it relentlessly clear that we cannot have a common currency zone without a common fiscal, economic and social policy," Schroeder said. He added: "We will have to give up national sovereignty." – Reuters

Dominant Social Theme: This was supposed to be a good deal easier! What the heck is going on? People need to accept a United States of Europe. It works for America doesn't it?

Free-Market Analysis: Presumably Gerhard Schroeder couldn't stand it anymore. The corrupt and failing European Union, which has not delivered on a single promise made by its founders and enablers, is in serious trouble and Schroeder was ready to move ahead with a long-planned script.

What is it? Well, as the DB and other alternative news forums have pointed out, Europe's leaders expected a financial crisis would drive the EU toward political as well as economic consolidation. It is not working out that way.

Blame it on the Internet Reformation, which has enlightened many Europeans about what the EU really means and how their leaders have planned to manipulate them. From Spain to Greece to Italy and Ireland, Europe is aflame with protests and recriminations. The EU is not currently seen as a success by many involved in its direction and fate.

Germans, too, are joining forces with the discontented populace frequenting the PIGS of Europe. The upcoming decision by the German Constitutional Court on Wednesday regarding whether or not the EU bailout moves of Chancellor Angela Merkel are within the EU charter may be rendered moot by the continued fury of the German people.

Germans feel pinched by an impending recession at the same time as the euro is inflating. They are fearful of ending up as the payers of last resort for Europe and there are plenty of ways to build a market for their well-tooled products. They don't need the EU, certainly not one as large and problematic as this one.

Gerhard Schroeder, no doubt sensing that the German people are wavering, has attempted to reinforce what he considers the logic of the Union. But his statements sound contrived and sentimental – surprisingly old-fashioned. It is as if he is a voice from a bygone era.

"From the European Commission, we should make a government which would be supervised by the European Parliament. And that means the United States of Europe," he proclaims. Never mind that US Treasuries were just downgraded. Never mind that the US is slumping from recession to potential depression. Never mind that the US is the largest debtor nation in the history of the world. Schroeder thinks the model is wonderful.

He has other points to make. He wants a grand union with France, of all countries. If France and Germany can somehow merge politically, that would provide an example to other countries, in his opinion. Again, one gets the eerie feeling that Schroeder is misjudging his audience.

The German people are angry. They are in no mood for talks of mergers, it would seem. The last time Germany and France merged, it was a forced union, derived from Adolf Hitler's lightening conquest of France. Schroeder thinks the time is ripe for a more peaceful effort. He welcomes an initiative launched by Merkel and French President Nicolas Sarkozy to move toward a fiscal union in 2012. Is he dreaming?

Their proposal, according to Reuters, would mean giving up sovereignty over budgetary policies with the aim to shore up the 17-nation currency union. Other EU countries have not been especially enthusiastic. Schroeder soldiers on. Not only is he a proponent of a closer union, he wants the EU to issue bonds. "That is the correct way forward and the precondition for the correct funding – euro bonds," he said.

Such radical proposals are being offered against a backdrop of an unraveling European market. European stocks tumbled 4 percent on Monday, according to Reuters, and bank stocks were hit especially hard. One wonders if the damage is done, or if markets will take a further tumble today.

The problems are adding up continually. There is worry about a further downturn, about the lack of resolution in Europe to the sovereign debt crisis, about US unemployment and even about the relative strength of the BRIC economies, especially China and India.

Oil sold off, too, yesterday, while gold gained. But it is the upcoming decision by the German Constitutional Court that may weigh the most heavily on the market now. Schroeder tried to turn this into a positive as well. "In the crisis lies a real opportunity to achieve a political union in Europe," he said, according to Reuters.

His optimism was not echoed by German Finance Minister Wolfgang Schaeublem, who said yesterday at a conference (see article excerpt, above) that aggressive austerity was the only answer to the EU's problems and that such a state of affairs might last as long as seven years. "Governments in and beyond the Eurozone need not just to commit to fiscal consolidation and improved competitiveness, they need to start delivering on these now." Here's some more from the article:

Schaeuble said there was now a broad consensus for more robust, crisis-resistant market regulation. But he described the process as laborious and said momentum for regulatory reform appeared to be fading within the G-20. "In this context, it may become necessary for key countries to move ahead unilaterally in specific areas, Schaeuble said, noting that Germany had introduced a limited but controversial ban on naked short-selling.

Schaeuble again reiterated his opposition to the notion of joint liability Eurobonds, saying that not only would such a step fail to durably solve the crisis by addressing only its most superficial symptoms, but it could make it worse in the medium term by removing a key incentive for the weaker members to forge ahead with much-needed reforms.

There doesn't seem to be much of a consensus on anything these days. Schroeder wants a closer union and Eurobonds. Schaeuble is convinced the euro-crisis is going to last another seven years and that pan-European regulatory reform is becoming increasingly problematic.

We've pointed out in the past that a realignment or shrinkage of the EU would be a defeat for the power elite that seems intent on creating a formalized one-world government. The EU was to be a critical building block and the great banking families behind the nascent one-world order are wary of setbacks, especially in the Internet era where so many of their plans and promotions have been exposed.

In fact, global warming is a largely discredited dominant social theme, and the war on terror has foundered in Afghanistan. Barack Obama, positioned to become an Islamic conciliator and beloved FDR-styled President, has proven to be a less-than-adept politician, though a good-enough campaigner.

If the EU or even the euro were to fall apart, it could be seen as a significant setback given the lack of success of various other elite themes of late. The Internet Reformation is so large and diffuse that it is difficult to confront in our view.

After Thoughts

Of course one could argue that the failure of the EU would just give the Anglosphere's elites the ability to focus the West's frightened populations on the salvation of a global currency, a long-desired goal. But such a scenario is speculative for now. What is certain is that the 21st Century is nothing like the 20th.

Posted in STAFF NEWS & ANALYSIS
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