The European crisis, sovereign debt and the euro

by Mihaela Gheorghiu

Europe and the United States are today facing a chiasmic debt, the fruit of more than 30 years of financial orgies and mis-management. Because “democracies” with their eyes staring at electoral agendas, are not concerned with anything but the foreseeable future. This is a flaw that has consolidated over the years the endless reservoir of liquidity offered by insured banks through life annuity (debt service) ad vitam aeternam.
In Europe, most eurozone member countries are faced with increasingly larger debts. The United States, being also on the brink, has injected $ 900 billion (645,4 billion euro) into the economy since the autumn of 2010 hoping to pay a small part of its debt, in order to obtain lower interest rates … Two parallel crisis that put the West face to face with an unusual situation, evidence of an end-of-cycle and maybe the conclusion of a phase of development of human societies.
Greece is already on the verge of bankruptcy, with the pressing need for a loan of 8 billion euro, which no one is willing to offer. As for Spain, Italy, Ireland, Portugal, they are also on the edge of the precipice, to which France is fast approaching. With regard to the Greek collapse, currently they are debating the percentage of losses the creditors will suffer. And this because they have fully encouraged Greece to continue on the path of facile financial demagogy, a corollary of client democracy, which instantly buys the suffrages of different social niches by granting advantages and encouraging the right to laziness…

The euro, idol or column of the Europeanist temple

It is therefore under debate the possibility of a partial insolvency of Greece, of over 30%. This would be a lesser evil, taking into account the stubbornness of the euro bankers to help maintain Greece in the eurozone, which deepens day after day the abyss of the Greek debt. However, if Athens were to leave the sad paradise of the Euro and return to the Drachma, the Greeks would hold that invaluable adjustment tool which is known as devaluation. But that would be too simple. Well, no, the integrity of the eurozone should be maintained at any cost, thus the refusal to exclude Greece from the eurozone, because – according to the words of narrow-minded stubborn Eurocrats who populate the Government offices – the euro is the one on which Europe fiction in Brussels is based on.
Ideologies have a difficult life: better for the peoples to perish in order for them to exist!  Only 16 out of 27 countries are members of the eurozone. Therefore no one would suggest the idea that Europe, with or without the euro, would not exist. Then why do they persevere with such an aberration? Probably because the euro is much more than a currency, it is also a necessary political tool to link nations to one another, to clog them in the federalist crucible and achieve a criminal utopia – since all utopias are criminal – of a vast European Union, a vast anonymous society characterized by an unlimited irresponsibility… Except maybe a hard-working but old Germany, which for the time being, craftily avoids these problems! A Western world where the poverty rate is steadily increasing due to the catastrophic effects of de-industrialization (the financial industry could not substitute it, because you have to buy everything that you do not produce and hence the vertiginous growing deficits (at the end of 2010, China’s trade deficit reached the figure of 22 billion euro, according to the French economy Minister, Christine Lagarde, during the visit of the Chinese President Hu Jintao in France)).

The whole eurozone is likely to be insolvent


Quartered in the beginning only to PIGS (Portugal, Ireland, Greece, Spain), the bond crisis now threatens to swallow the whole eurozone. The demotion of Italy by the rating Agencies – allegedly – increases the fear in the “markets” (remains to be seen what really hides behind the mysterious word “market”), and raises, by an inverse effect, the financial risks assumed by investors who lack caution. The risk of overgrowth is in fact a good excuse to become increasingly greedy through increasingly higher interests rates. Or the loss of trust – trust being a kind of immaterial ether where the plot of the financial universe unfolds – now extending to the entire Eurozone: stock markets collapse spasmodically, the euro currency slips and all these demonstrate from day to day the pathological inability of the
Europeans heads to grab the bull by the horns. Does this mean the end of Euro land?
Is the collapse of the euro such a serious matter? Europe existed before the euro, and will continue to exist with or without the euro. We would rather have reason to believe that Europe has more of a chance of recovery without the euro as its single currency … We must also take into account what it means for the common people to maintain it as the single currency as far as the induced austerity is concerned; knowing that the middle classes in Europe and all those who have no income other than that resulting from their own work, all those who do not benefit from the generosity of the State, in a word those who are not subsidized, will bleed until the last drop! All in order to keep Eurozone designed as nucleus of fusion of the Federal Union, these United States of Europe that have been under construction since the “Allies” victory in 1945, which presupposed the change of Europe’s face according to the American liberal-democratic model. These are the values that the euro bankers do not wish to give up, because this would mean to erase with a single blow 66 years of insidious efforts, full of patience, 66 years of lies and manipulation.
However, the remedy of most of the current economic problems is relatively simple: to definitively end the idolatrous fetishism of the euro…  because the world will continue to exist even if Greece and other countries leave the eurozone. The Euro will no longer be single currency, but it might be the common one. There will be no dramatic catastrophe. We will have to roll up our sleeves and clean up the ruins left by the liberal-libertarian sect, through an anarchic-capitalism which believed it can allow itself into anything until it got to the point of destroying economies filling the masses with excessive consumption. The bill will be have to be paid and we will have to face tomorrow when it will break the spell of the vane socialist teams that are in power in Athens and all over the liberal, social and democratic Europe.
If the sincere Europeanists would be smarter, more lucid, more coherent in concern to their ambition to create a powerful Europe– for here is the cause of one of the paradoxes of the so-called European project, some euro-sovereigns left themselves abused by ideocrats and abused by other political commissioners in order to destroy the true Europe on grounds of building a so-called European Union – they would militate for Greece’s exit from the eurozone. Furthermore, they would support the idea of   an urgent return to national currencies, reducing the euro to a reasonable size, that of a common currency. But will this mist be removed in time from their eyes?

Member state bankruptcy, a media scare tactic


Regarding the specter of bankruptcy used as a scare tactic, a brief historical review will enlighten us. Around the world in recent centuries, the bankruptcy of states was something common and no one died from such a thing. Just as a strong fever is an extreme mobilization of the body that can kill germs, bankruptcy can be a solution that limits a state’s financial crisis. For example, France has a record of eight bankruptcies between the 14th and 18th century. In addition to these is the bankruptcy of the assignat (the currency used during the French Revolution, with a role as a loan), the peak period of incapacity and revolutionary robberies. The 19th century is that of bankruptcy in Hispanidad, South America and in Spain, which experienced seven successive bankruptcies. Greece, after its independence in 1830, was already distinguished, repeating these bankruptcies chronically. The United States has not been spared either, they have known a certain number of periods of insolvency in the past two centuries: the Continental failure of 1779 in regards to its first release of the currency by the Continental Congress in 1775; the Greenback failure in 1862 in the context of the civil war that broke out the previous year; the failure in 1934 on “Liberty Bonds”  issued since 1917 to finance the entry of the United States in the Great War… until its partial insolvency in 1979.
Once with the Great Depression of the early 1930s, several European countries have been unable to repay their debts: Germany, Greece, Hungary, and Romania. The second wave of bankruptcy will fully hit Latin America and Europe, particularly Germany, Austria, Spain … In 1982 it is Mexico’s turn, which triggered a series of bankruptcies in Latin America; not to mention Africa where bankruptcy is an endemic evil! Russia in 1998, as well as in 1917 after that Red October, also went through such a period. In short, bankruptcy is a difficult time for all, lenders or borrowers, but it is not something difficult to achieve and impossible to overcome. Or, if it is the necessary condition to retrieve, at least in part, the economic health and to put the national Europe back on the floating line, then long live bankruptcy and Greece leaving the euro zone… long live the end of currency, of limited thinking and wooden language…

Disastrous and ineffective solutions to keep Greece in the eurozone

Thursday, July 20, the 17 heads of the euro zone, agreed to a new plan to bailout Greece for 158 billion euro, the amount subsequently fixed at the figure of 109 billion by the ECB and the IMF, a package which is added to the 110 billion already granted for a period of three years in May 2010. It seems that these measures will not solve the basic problem, but if we were to believe Mr. Trichet, Chairman of the Central Bank of the 17, that estimated, a few hours after they adopted this plan devised in despair, that this would lead to the emergence of a “credit default swap” (CDS). In other words, a partial non-payment– by putting into action a series of devices to insure against the risk of a state going bankrupt- liable of causing a new episode of acute crisis on the European debt market.
Therefore, the next day, Friday 21 of July, the Franco-American rating agency Fitch Ratings announced that the Greek “note” was indeed going to decline due to a partial failure. The Agency, which did not underrated “the important and the positive” agreement completed previously, provides that Athens will inevitably not be able to pay its old obligations since the last plan (taking into account the contribution of private creditors in Greece) amended substantially its initial terms of the loans! Incidentally, as the Greek GDP (gross domestic product) has a tendency to fall and because the loans follow a reverse direction, it is evident that the results will never be fantastic.

The threat sent to Athens by Fitch Ratings was implemented by Moody’s on Monday, July 25, 2011 at 7 o’clock, which lowered Greece’s sovereign rate to the crash limit… all these came like a cold shower just five days after a summit that had made much ado about nothing! This gives us a pretty clear idea about the very high negative power held by the private Agencies which supervise the market of available capital, and which have the power to destroy with a single movement of the pen the result of many months of laborious negotiations, undermining a rescue plan … which took water from all sides before going out on the high seas. It also gives us an idea of the contempt with which the Anglo-American markets treat the Europeans, good to be exploited up to the last drop with the sole aim to repay the crazy debts that they were unconscious enough to contract!
But all these aspects being determined beforehand, what good is the media circus around a useless summit? Has this all happened to avoid the extension of the crisis in Spain and Italy and then throughout the eurozone? Of course! But for this purpose – to say it straight – those 17 finance ministers in the eurozone have not been precisely helpful to Greece, as they dare to claim… In reality, and on a priority basis, they do not do this for any other reason other than to save themselves, more precisely because the insolvency of Greece would lead back to one of the German and French banks that hold the majority of Greek debt and this would lead to the final fall of the euro House!

What is there to do? What could be envisaged?

The solutions we are offered, from the least realistic (which probably would be the most appropriate) to the most realistic, none of which has the slightest chance of being implemented: first, the declaration of a moratorium on the debt; second, the assessment of stock markets for what they actually are, namely, gaming establishments  where cheating haunts, and therefore treating them according to what they are, in other words, not to tolerate them being open more than a few days a month; third, the taxation of what is not currently taxed, especially speculative transactions, risk products etc. which would allow the deletion of all debts in the shortest time possible…
Beyond all this, loans could be made only on the domestic market, according to the Japanese model (Japan has a debt of almost 200% of GDP, but being contracted on the domestic market, it does not affect the charges of loans) and for this it would be necessary to revise the laws and treaties involved. Or it would be necessary to reconsider the euro as a common and also “single” currency. All measures should be accompanied by provisions to aim for a strict framing of the credit, the condemnation of any inducements to use easy funds and, in doing so, it is necessary to proceed to the implementation – still in its infancy– of an ethical behavior which would result in the separation from everything that might have any connection, close or distant, with the ideology of consumption which is about to destroy us… Because the days to come after the party risk being very hard for the consumerist societies, in other words, the return to reality would be tough!

Another possible solution to the crisis, but that would have important long-term consequences, would be the creation of a European Monetary Fund. In this case debts of the member states could be transferred to the EU, in other words would involve converting the Union into an economic sovereign power, this translated by issuing bills by the European treasury… But this would mean a considerable gain of ground of federalism in budgetary matters. How states no longer issue their own currency, they are now called upon to discard the last items that assured their financial and economic sovereignty. One solution to absorb the debt would be that the EU member states put into action a collective plan of afloat resettlement, for example through massive recapitalization of the Central Bank or the European Stability Fund. Yet already these two institutions are already overwhelmed by debts of Greece and Portugal … therefore, the crisis progresses faster than the decisions taken embarrassingly by the chatters of the European bureaucracy.
With regard to the British Government, its position is clear: “no money for Greece and the eurozone”. The British, on the contrary – good counselors, but poor payers – warmly recommend fiscal integration of the continental nations. A concept which perfectly illustrates the impressive continuity of London towards the states that came out of the World War II, in particular beginning with the speech of Winston Churchill in Zurich on September 19, 1946, a speech in which he called for the construction of the United States of Europe and for Franco-German closeness … a project which did not involve the United Kingdom, to which it was recommended to stay away, just like today, from the joys and problems of the old continent.

The legend of the Danaids, one of the many Greek legends with a pretty “bloody” tinge, ends with the eternal punishment to which they were subjected, to fill a bottomless barrel – somewhat like the endless effort of Sisyphus. Such a bottomless barrel is also the debts of the member states. A “system” is currently self-destructing before our eyes, each of them thinking, acting and governing their own existence-as the mighty act with the fate of their peoples–according to the spiteful saying “after me the flood “. The flood appears to be imminent, and the Europeanist Noah’s Ark looks increasingly more like the Titanic which is about to sink.


8 December 2011

Also available in: Română

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