STAFF NEWS & ANALYSIS
The EU Has Faltered Over Greece
By Staff News & Analysis - May 03, 2010

Monetary union has delivered a 'German Europe' after all … We now know the answer to Henry Kissinger's question: "Who do I call if I want to call Europe?" Only one person matters. The Chancellor of Germany. Berlin was Europe's capital last week, basking in summer heat of 26 degrees. The heads of the European Central Bank and the International Monetary Fund (IMF) – both French, oddly – arrived as supplicants, pleading with Chancellor Angela Merkel and a stern finance committee of the Bundestag to save monetary union. Nowhere else mattered. The markets have stopped listening to Paris or Brussels. If the aim of Helmut Kohl and Francois Mitterrand at Maastricht was to tie down a "European Germany" with the silken chords of EMU, they failed. Monetary union has delivered a "German Europe" after all. – UK Telegraph

Dominant Social Theme: Germany sets the table.

Free-Market Analysis: The Bell suggests that investors focus on the most fundamental issue of the 21st century when trying to analyze what's going on in the world from an opportunity standpoint. From our point of view this fundamental issue is the collision between the Internet and the power elite's dominant social themes. These fear-based promotions seek to frighten people into offering up power and wealth to conveniently created "globalist" authoritarian solutions. The United Nations is one such, and the IMF another. A third is very obviously the European Union.

The European Union was certainly a fear-based promotion to begin with in that it was offered as a way for Europe to compete with America and the almighty dollar. Later on, toward the end of the current consolidation effort, the promotion gave way to outright lies. Europeans were told that EU bureaucrats had no ambition to create a United States of Europe, but then the EU promptly turned around and tried to force through a full-fledged constitution. We were aghast at the writing of the constitution, which clearly stated that the EU itself was in the position of offering and withholding citizens' freedoms. This is unlike the US Constitution, which attributes such natural rights to a creator and thus tried to place human freedom and dignity beyond horse-trading and majority rule.

Today the EU leaders are scrambling for a way to save what they've built. The emergent German influence as explained in the above excerpt is most telling and bound to be disheartening to those who for one reason or another are in the EU camp. The Telegraph article is quite right in anointing Germany the largest and most powerful player in Europe and, beyond that, the only one of apparent significance when it comes to core survival issues. For investors who are tracking the unraveling of dominant social themes in the 21st century, the EU is rapidly reaching a tipping point. Here's some more from the article:

Let us be clear what has happened. This is a one-off rescue. The money is in the form of bilateral loans, not an EU bond. Mrs. Merkel has refused to be bounced into an EU debt union or into acceptance of fiscal federalism.

By defending German sovereignty – as she must under the 1993 Maastricht ruling of her consititutional court – Mrs. Merkel has left the eurozone in exactly the same dysfunctional state as it was when the Greek crisis first erupted, and therefore equally ill-equipped to cope with the next tremor. The damage already done to EMU credibility is huge.

"The crisis has shown to the whole world that Europe is unable to manage a monetary union: it has had to call in the IMF," said Wim Kosters, Monet Professor of European Economics at the Rhine-Westphalia Institute. "We created rules that nobody followed. It wasn't the Commission that put a stop to the game, the markets had to stop it," he said, to warm applause from German fund managers at a Euromoney forum in Berlin.

Across the street, Czech President Vaclav Klaus was enjoying equally warm applause at Humboldt University as he savaged Europe's "fair weather" currency with his usual gusto. "I thought I would be pelted with eggs and tomatoes. Something has changed in Europe," he said.

This would be our point, too, that something has changed here in Europe. We think it is a most important change, as well, as much of a bellwether as the collapse of the global warming theme. Another power elite meme seems to be coming acropper. One can argue about the role that the Internet played, but we'd be prepared to make the point that 'Net did play a significant role, especially in the rejection of the Lisbon Treaty, initially, by the Irish and the rejection of the EU Constitution by France and several other EU countries. There is no doubt that European citizens are better educated as to the EU than they would have been absent the 'Net.

We are, of course, aware of the doom and gloom surrounding the EU project from a libertarian standpoint and the union's purported inevitability. But given what's just happened with Germany, we wonder if the future of the EU is quite as bright as it's made out to be by those paid and unpaid cheerleaders in the mainstream media. This latest deal to save Greece (we've lost track of how many have been announced) is just the kind of one-off funding bill that the leaders of the union probably feared.

It has probably already occurred to Germans that the country can export to Europe whether or not an EU exists – and if the EU is to drag German citizens into a series of bailouts of Europe's most profligate nations, well … where's the advantage in that? For most practical Germans, defaults and devaluations with or without the IMF's help might seem infinitely more reasonable than cobbled-together rescue efforts that only throw good money after bad.

We have maintained in the past that the financial crash itself was perfectly predictable and that the power elite was willing to let it roll along until it began to spiral out of control more quickly perhaps than anticipated. At that point huge bailouts were implemented that further inflamed the situation, especially in the West. Finally, the crisis, which affected Europe and was supposed to usher in a powerful political union to accompany the economic one has seemingly backfired. Europe generally is in no mood for the bureaucrats in Brussels to gain more power at the expense of the nation's-states.

After Thoughts

Is this a classic confrontation between a dominant social theme and Internet-related information. We would argue that it is, and that the Internet is doing a good job of publicizing the various sides of the story regarding the EU and the financial crisis. Additionally, we have no doubt that the Internet is proving helpful in spreading a general sense of unrest as various countries begin various kinds of belt-tightening. Finally, we will end with the point made toward the beginning of this article – that the German decision could perhaps be a most important one in what may turn out to be the foundering of this meme.

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