By Pepe
Escobar
History will register his plane
struck by lightning on the way to Berlin, no fancy
kisses, and asparagus with veal schnitzel on the
menu. This is the way the eurozone ends (or begins
again); not with a bang, but a ... lightning
strike. Merkollande - the new European power
couple drama interpreted by French Socialist
President Francois Hollande and German Christian
Democrat Chancellor Angela Merkel - is a go.
Trillions of bytes already speculate
whether former President Nicolas Sarkozy spilled
the full beans about "Onshela" to Hollande - apart
from the fact she fancies her glass of Bordeaux.
King Sarko also had a knack for making stiff
"Onshela" laugh. That may be a tall order, at
least for now, for the sober and pragmatic
Hollande.
The good omen may be that both
do not eschew irony. In the middle of such a
eurozone storm, that's a mighty redeeming quality.
Then there's that lightning strike on the way to
Berlin. Was it Zeus sending a message that his
Greeks would have to be protected - or else? Not
to mention that Europe is a Greek myth (Zeus made
Europa, the beautiful daughter of a Phoenician
king, his lover…)
About that German
miracle
So now Merkollande has to show
results. There's not much they're bound to agree
on - apart from the possibility of a financial
transaction tax (FTT) which could yield up to 57
billion euros (US$72.5 billion) a year to battered
trans-European economies, according to the
European Commission (EC).
Berlin is not
exactly against it. But Britain, for obvious
reasons, is - seeing it as curbing the City of
London. The EC, applying some fancy models, has
already concluded that a FTT would not be a burden
on economic growth; that would represent only 0.2%
in total by 2050.
Two members of the
troika - the EC and the International Monetary
Fund (but not yet the European Central Bank) -
along most governments in the EU, now at least
admit that some countries, such as Spain, will
need more time to reduce their deficits. An FTT in
this case would come out handy.
At home,
"Onshela" is secure her austerity mantra is
popular (61%, according to the latest polls). Yet
she lost another regional election last weekend,
in heavily urbanized Nordrheim-Westfalen, the
fourth largest urban concentration in Europe after
London, Paris and Moscow - now suffering from
deindustrialization and high unemployment. And
this after losing in rural Schlewig-Holstein, near
the Danish border.
What's fascinating is
that all this had nothing to do with Europe - and
the messy fate of the eurozone with the strong
possibility of Greece leaving the euro. German
voters couldn't give a damn. They are first and
foremost worried about their own eroding
purchasing power.
So for the first time
the Supreme Taliban of austerity, German Finance
Minister Wolfgang Schauble, has admitted in public
that a general wage freeze - one of the pillars of
the new, neo-liberal "German miracle" - should be
revised. Even the Financial Times has admitted
that consumption in Germany is "anemic". Schauble
now says that wage increases might help.
The heart of the matter is that whatever
"German miracle" is good for Germany's robust
banking and financial system, is not good for a
vast majority of its workers. Plus this
neo-liberal miracle simply can't be sold anywhere
else in the world.
German weekly Der
Spiegel did its best to show why [1].
The
heart of the "miracle" is - predictably - the
deregulation of the jobs market, always against
the interests of workers. That implies a tsunami
of part time jobs, "non traditional contracts" and
sub-contracting. This means masses of workers not
eligible for bonuses or participation in profits -
coupled with a reduction in retirement payments
and pensions. The graphic consequence has been
Germany as the current European champion of rising
inequality.
Who's in charge
here?
It's wishful thinking to imagine some
German politician seeing the light, Blues
Brothers-style, and suddenly preaching a true
European political integration. German regional
politics is directly linked to the banking
industry - the same banks which had a ball
speculating on securities all across Europe,
especially in the Club Med countries.
Blaming the eurozone abyss on the
irresponsible acts of selected European nations,
on their mounting public debt, and even their
pensioners, is perverse. The real cause is the
ferocious deregulation of the financial system and
the worshipping of the God of monetarism. The
absolute majority of European political leaders do
not have a clue about basic economics. They have
been at the mercy of technocrats who could not
give a damn about the social and political
consequences of their actions.
But now the
technocrats are finally freaking out because if
Greece, for instance, nationalizes its banks, the
Spanish and French financial systems will go bust,
and Germany's will be in deep trouble. Once more
this is a graphic illustration of how countries
across Europe are - in the public as well as the
private sector - totally dependent on the
financial system of other countries.
The
Masters of the Universe in Europe are actually the
Institute of International Finance (IIF) [2] a
lobby representing the 450 largest world banks.
They get a privileged seat on every significant
euro-summit. The proverbial EU and IMF "officials"
actually ask the Masters how much a country - as
in Greece - should pay to get itself out of
trouble. Europe's commissioner for economic
affairs, Olli Rehn, is a certified servant of the
Masters. Obviously the EU leadership will never
admit it is in fact controlled by a cartel of
bankers.
One currency, 17 debts
It's hard to believe Merkollande can find
a way out of this financial labyrinth. We are
facing the uber-surrealist situation of a single
currency with 17 different public debts - over
which the frenzied "markets" can merrily speculate
while individual states cannot fight back, for
instance by devaluing their currency. It's this
set up that has plunged Greece into the abyss -
and may do the same with the euro.
Thomas
Piketty, a professor of the Paris School of
Economics, dreams that Hollande might become the
European Roosevelt. That may be as unlikely as
Prometheus getting rid of his burden. But at least
Piketty identifies the problem; imagine if the Fed
everyday had to choose between Texas debt or
Wyoming debt - it would never be able to conduct a
sound monetary policy (not that it actually does…)
That explains why the European Central
Bank cannot possibly be a factor of financial
stability. Meanwhile, Europe is left wallowing in
the mire of loaning buckets of euros to banks,
hoping they will loan them back to individual
states; or loaning the money to the IMF, hoping
they will do the same.
Into this quagmire
comes Hollande with an economic Hellfire missile;
he says that instead of loaning at 1% so the banks
make a killing loaning to individual states at a
much higher rate, the ECB should deal directly
with European nations. He wants the FTT - now. And
the wants the European Investment Bank to extend
credit to companies. And he wants euro-bonuses to
finance infrastructure works.
"Onshela" is
bound to give him a firm "nein" on all this
- except, maybe, the FTT. Because this all implies
that these debts are part of a common European
debt. That would be, according to Hollande's
vision, a conception of Europe true to its
construction - less technocratic, less hostage of
the God of the market, less constrained by the
dogmas of the financial system. Will Merkollande
pull it off? Ask "Onshela".
Note:
1. See The
High Cost of Germany's Economic Success, Der
Spiegel, May 4, 2012.
2. - See here
Pepe Escobar is the author
of Globalistan:
How the Globalized World is Dissolving into Liquid
War (Nimble Books, 2007) and Red
Zone Blues: a snapshot of Baghdad during the
surge. His new book, just out, is Obama
does Globalistan (Nimble Books, 2009).