Eurozone farce descends into pantomime

Date:

Ignoring cries of “Behind you!” as stock villain David Cameron skulked behind them waving his “veto”, Europe’s leaders announced to the world last week that, this time, they had definitely fixed the crisis in the Eurozone. “Oh, no you haven’t!” jibed the media, “Oh yes we have!” Merkozy and the Eurocrats blustered desperately. “Oh no you haven’t!” responded the markets this week.

While the British liberal media wrung their hands over “isolation in Europe” and the Tory press grandees cheered their success in sticking it to the hated “Johnny Foreigner”, the seemingly interminable Euro-farce descended into seasonal panto slapstick. By the end of the week, French ministers, crying at the threat of the ratings agencies to take away their triple-AAA rating, were reduced to loud claims, vis-a-vis the loathed Anglo-Saxons that, in the matter of economies, “ours is bigger than theirs”. And this, ladies and gentlemen, boys and girls, is how our supposed betters are setting us the example of how to behave in the middle of a crisis. Widow Twankey has nothing on this shower. And yet, like left-over turkey, the Euro-crisis stubbornly refuses to go away.

Looking behind the spectacle of Europe’s leaders acting like seven year olds, desperate to avoid blame for burning down the scout shed, this wretched excuse for a deal bears some scrutiny. Even though the likelihood of it lasting until the proposed adoption date of next March is slim to none (for once the reluctance of the government to begin the process of preparing a referendum is probably just good sense).

For over a year the pundits have been proclaiming that the fundamental flaw in the Euro was that it instituted monetary union without fiscal union. Hence, with leaden predictability, last Friday’s deal was announced as a new “fiscal union”. Nothing could be further from the truth. Fiscal union means the creation of a single account, into which all taxes are paid and from which come out all government spending. Or, more practically as an interim measure, roughly the same thing could be achieved through the creation of centralised “eurobonds” to replace nationally issued sovereign debt bonds, so that all Eurozone countries would pay a unified interest rate and market speculation that weaker “peripheral” countries are about to be forced out of the Euro would be quelled once and for all.

This deal is not that, as Germany has set it’s course against eurobonds or any other step in the direction of genuine fiscal union. Instead we have a farcical proposal to write into EU countries constitutions all sorts of (so far unspecified) nasty punishments for deviants who break the new extra-stringent prohibitions against running up structural budget deficits of more than 0.5% GDP or gross debt of more than 30% of same (TODO check figures). This is not fiscal union, it’s fiscal Bondage, Domination and Sado-Masochism - except there’s no equality in who is to be disciplined and who is going to be wielding the whip.

Regardless of any questions of fairness, the arrant nonsense of the scheme as a practical response to the problems of the Eurozone crisis has been widely and rightly denounced. Firstly, in the case of Ireland, immediately prior to the crisis itself Ireland was running a budget surplus and had a national debt far below even these latest most draconian levels. These new measures wouldn’t have made a blind bit of difference in either warning of or preventing the crisis we are now in. Secondly no-one can agree on how to calculate the difference between the headline surplus or deficit of a national economy and the “structural” levels. But mostly, there is no attempt to deal with the huge losses of the European banking system in property bubbles around the periphery that have left huge mountains of paper debts based on now worthless assets. Without a significant move to adjust the account book story to better match the real world picture, the crisis continues.

The nature of the crisis is the political incapacity of the political leadership of the Eurozone to face reality. Professional politicians spend their lives learning how to evade the responsibility for their mistakes by placing the blame and burden on someone else, how to sidestep difficult decisions, how to kick the can down the road and fudge the issue. But none of these well-worn tactics are capable of getting out of the current impasse.

The choice remains, does Germany pursue it’s current line of denying reality, or change the habits of a lifetime and do something else. If they continue in the current path the Euro will break up leaving a rump currency as an enlarged Deutschmark, which will rise against other world currencies (particularly as the rich of countries evicted from the Euro store their wealth by buying German bonds) thus destroying the German export industry, in turn dragging Europe and the rest of the world into a global recession, this time of a 1930s level or worse. And in case you think this is leftist hyperbole, this is the scenario being warned about by the head of the IMF, Christine Lagarde, and the commentators of the Financial Times, Economist and Wall Street Journal, amongst others not normally associated with radical anti-capitalist positions.

So what’s the alternative? Well, in fact there are any number of them. It’s not for lack of economic alternatives that the Eurozone is in crisis. The crisis is political, not economic at root, even if the destructive forces are manifesting as market forces. But part of that political crisis is the lack of democratic input by the largest number of ordinary European workers and citizens. If part of the problem is that what we want doesn’t count, then wasting time asking ourselves what we would want if we were asked, is an exercise in futility. The question then is what weapons do we have to hand that we can use to make a difference? We are faced with a programme of austerity that we all know about - their plan is to make us pay for their screwups. The classic weapons of direct action remain the same three they always have - strike, sabotage and boycott. In a time of high unemployment, job insecurity and craven union leadership, our opportunities to wield the strike weapon is much weakened. But the austerity programme requires our governments extract new additional taxes from every household in Ireland (and also Greece, Spain and Portugal) to pay off the Eurozone bankers’ losses. Our weapons of sabotage and boycott remain as strong as ever in the face of these new attempted robberies. Now is the time to use them and to inscribe once more on our banners - Can’t pay, Won’t pay!

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