Countries are now being held to ransom by special-interest factions

Power is fragmenting. But what is the true cost to democracy?

Countries are now being held to ransom by special-interest factions – look at the Tea Party in the US or Ukip in Britain

• 
• • Will Hutton
  • The Observer, Sunday 25 August 2013

Supporters of Wikileaks founder Julian Assange, wearing Guy Fawkes masks: 'The digital age, globalisation and higher levels of education have equipped more people to become insurgents or to form single-issue pressure groups.' Photograph: Will Oliver/AFP/Getty Images

Power is leaching from the centre, even as the complexities of national and international challenges multiply. It is the hallmark of our times. Whether political or religious leaders, CEOs or five-star generals – all are more constrained in what they can do.

This is a pattern across all societies. The digital age, globalisation and higher levels of education have equipped more people to become insurgents or to form single-issue pressure groups. It is a world where the opportunities to be a Julian Assange, Beppe Grillo, Osama bin Laden, George Soros or Nigel Farage grow by the day. Power is draining away from those in whom it is formally placed, but with no obvious substitute in sight.

As Moisés Naím writes in The End of Power, there are three interrelated dynamics gnawing away at formal power structures – what he calls "the more revolution, the mobility revolution and the mentality revolution". There are more literate, educated people worldwide than ever before who refuse to be regimented and controlled as they once were. They are mobile, migrating and exchanging information to an unparalleled degree. Moreover, fewer will take anything for granted: they expect their voice to be heard, whether on the streets of Cairo, on social media in China or in anti-fracking protests in Sussex.

Naím is the first to concede that the dispersion of power is frequently a force for good. One obvious benefit is that autocracy is on the wane. In 1989, Freedom House reckoned that only 69 countries could be counted as democracies: today, the number has reached 117.

It is also good that the chances of mass war on a 20th-century scale are shrinking: in a world of declining power,, as US generals are relearning in Afghanistan, war is won differently today. It is the fast-moving insurgent who can capture hearts and minds or the terrorist cyberhacker who ends up ahead. But as Naím wryly remarks, the decay of power even undermines the insurgent terrorist groups themselves. He reports that 26 of 45 terrorist organisations dissolved, not from being beaten militarily, but from internal strife and challenge. Al-Qaida's greatest weakness is its own factionalisation, as will be the Taliban's.

It is this tendency to fragmentation and the chorus of often irrational voices insisting that their demands be met that most concerns Naím. It may be easier to establish a single-issue NGO, a religious movement or a political faction, but that does not mean that the consequence is necessarily always beneficial.

There is now certainly hyper-competition from new religious groups, or from blogs, tweets and websites trying to sway your opinion. But the consequences can be perverse. The rise of charismatic religion may challenge centralised, formerly powerful religious groupings that have lost their way, such as Catholicism, under increasing siege from the rise of Pentecostal churches in Africa and South America. But religious fundamentalism's grip on logic and rationality is even more tenuous.

Similarly, millions of blogs and tweets have forced news consumers to fall back on trusted, established sources, aiding media concentration rather than diminishing it.

But the "more, mobility and mentality revolutions" have their most obvious malign impact on politics in general and the political party in particular. Naím observes that parties are the engine room of democracies: they gather a constellation of interest groups around a common set of principles that offer a compass for government. Everywhere, political parties are succumbing to the rise of uncompromising single-issue pressure groups, lobbyists and funders, and the corresponding decline of supporters who want common values expressed. It is now not just parties but whole countries that are held to ransom by a faction or interest group holding a simplified but impossible view of the world – Naim's "terrible simplifiers".

One obvious example is the US Republican party, now in thrall to the Tea Party movement, which sees no value in compromise, but instead worships at the altar of an imagined US constitution that allegedly guarantees a nightwatchman state. Another example is the emergence of the Pirate party in Sweden and Germany. However, interestingly, Naím sees Britain as the laboratory that conclusively proves his point. The rise of Scottish and Welsh nationalism and Ukip, along with the hollowing out of both the Conservative and Labour parties, make the country increasingly hard to govern .

This must, in part, explain the collapse in Labour and Conservative party membership over the past 50 years and the consequent weakening of their capacity to create formal and informal coalitions of a broad set of interest groups around common values.

Ed Miliband's and Labour's failures predictably get the most attention from the press – identikit pieces about his lack of forcefulness, clarity and too much equivocation – as if a new leader could magically solve the problem, but with no understanding of the much wider context in which any political leader now operates.

The Tory party's problems, driven by similar forces, are arguably even more acute. At any other time, David Cameron would be seen as a classic mainstream Tory. Today, he is marginalised by as many as 200 backbenchers owing their position to constituency association selectorates, some of no more than 100 activists, in thrall to "terrible simplicities" on tax, Europe, immigration and welfare.

Any genuinely tough call – to put property taxation on 2013 rather than 1991 values, accept the need for immigration, cigarette packaging or even build the HS2 train line – is made incomparably harder or is simply off-limits because of the veto of a single-issue pressure group that a party is no longer strong enough to take on.

It is the decay of power. The centre fragments and power devolves to myriad new forces that often exercise their power with narrow obsessions in mind. Who now speaks for the whole? Who keeps a macro view, mediating competing interests and conflicts and has the courage to make decisions based on a strategic view of all our interests, not just sectional ones?

Parties have to fight back –arguing better, crystallising policies better, running primaries to select their candidates to widen their appeal – as does our democracy. Representative government was a great invention. It now has to be saved from the single-issue, monomaniac, simplifying, self-interested vandals – a much more interesting position for Mr Miliband to take than a belated "me too" conversion to a referendum on the EU.

If only Britain had joined the euro

If Gordon Brown had chosen to join the single currency 10 years ago, both the European Union and Britain would be stronger now

• 
• • Will Hutton
  • The Guardian, Thursday 13 June 2013 19.30 BST

Gordon Brown with Paul Boateng and Dawn Primarolo in June 2003, just after his ‘not yet' decision on joining the euro. Photograph: Sean Smith for the Guardian

Ten years ago this week Gordon Brown said no to joining the euro. It is an anniversary on which Bank of England governor Mervyn King, Ukip's Nigel Farage, Unite's Len McCluskey and the Guardian's Larry Elliott, along with most of the British economic establishment, can all agree. On this, Brown was right.

Elliott set out the establishment consensus in a classic piece this month on his alternative history of what would have happened had Britain joined. Essentially, he says, there would have been a bigger boom in the runup to 2007 and a more disastrous bust. Britain would now be struggling to maintain its membership as anti-EU sentiment mushroomed, prompting its eventual exit, dramatising the inherent unsoundness of yoking disparate economies into one inflexible currency.

But there is a more optimistic, alternative history. The first obvious point is that Britain could have joined the euro only if a referendum had been won. A victory would have depended on it being an obvious good deal, with the pound entering at a competitive rate and the euro's structure, rules and governance reformed to accommodate British concerns and interests. The European Central Bank would have needed to look more like the US Federal Reserve, with more scope for fiscal and monetary activism. The Germans would doubtless have insisted, in return, that the EU banking system be more conservatively managed.

The last decade would have been very different. What none of the mockers of the euro ever acknowledge is the economic doomsday machine that Brown created through not joining. By not locking in a competitive pound, Britain suffered a decade of chronic sterling overvaluation, made more acute by the City of London sucking in capital from abroad to finance the extraordinary credit and property boom of those years.

Imports surged and exports sagged; the economy outside banking, which made goods and services to be sold abroad, either stagnated or shrank. Much of the best of UK manufacturing was auctioned off to foreigners. Today we find that, despite a huge currency devaluation, there are just not enough companies to take advantage of it: too much of the rest of British capacity, thanks to foreign takeover, has become a part of global supply chains that are indifferent to exchange-rate variation. Our export response has been feeble; evidence of the economic orthodoxy's inability to devise policies and structures that favour production.

Inside the euro, at a highly competitive exchange rate, Britain's exports would instead have soared, and its traded goods sector would have expanded, not shrunk. Regional cities would have boomed around sustainable activity rather than property and credit. The euro's rules would have meant a less reckless fiscal policy, and banks would have been more constrained in lending for property. They would have had to lend proportionately more to fast-growing real enterprise, reinforced because the new rules would have required them to lend in a more balanced way.

Britain would have entered the 2008 crisis with a far less unbalanced economy, a stronger banking system and international accounts, and a government deficit much less acute. And the reformed eurozone could have responded much more flexibly and cleverly than it did.

In any case, both Britain and Europe are now wrestling with depressed economic activity caused by overstretched bank and company balance sheets – and the exchange-rate regime is hardly the cause of this distress. Germany and the stronger EU countries are plainly wrong in their overemphasis on austerity as a solution, but surely right to argue that the only long-term solution is for the whole of Europe to move to their productivist, stakeholder capitalism.

British mainstream commentators see the obvious fissure between the stronger European north and the weaker south as proof positive that the euro is fatally flawed. But suppose countries like Greece or Ireland rise to the German challenge? Already there are encouraging auguries in both. If so, notwithstanding excessive austerity, they could weather the crisis, and become stronger.

There is plainly a chance one or more countries could leave, but there is a greater chance the system in some form will hold – it is in too many countries' interests to avoid failure. Then expect a pan-European recovery to begin in the second half of the decade that will gather strength in the 2020s.

Inside the euro for the last decade, the economic and political debate would have necessarily moved on. Having won a historic referendum decisively affirming Britain's future in Europe, the Blair government would have had to think in European terms about how to produce, invest, innovate and export. Sure, there would have been problems. But Britain outside the euro in 2013, with endless spending cuts, the biggest fall in real wages for a century, 500,000 people relying on food banks, and a weak unbalanced economy, is hardly a land of milk and honey.

Emboldened by his referendum victory, Blair could have sacked Brown before the disastrous second phase of his chancellorship and lacklustre prime ministership. Blairism would have morphed into a new form of European social democracy, fashioning British-style stakeholder capitalism. UK politics would not have moved so decisively to the right, with conservatives preaching free-market Thatcherism while the left clings to a bastard Keynesianism – united only in their belief, against all the evidence including Britain's export performance, that floating exchange rates are a universal panacea.

A single currency demands disciplines and painful trade-offs: but floating exchange rates after a financial crisis are a transmission mechanism for bank-runs and beggar-my-neighbour devaluations. Magic bullets do not exist. Had Britain joined, both we and Europe would have been better placed, and Larry Elliott would now be writing about how better to get Britain to innovate and invest under a fourth-term Labour government. A better world all round.

In truth bosses want cheap labour - People are told EU migrants steal jobs

 

The Conservatives are determined to be seen as the anti-Europe party, but an EU referendum that took Britain out of the union would be a disaster for the party

• 
• • Deborah Orr
  • The Guardian, Friday 17 May 2013 20.01 BST

Island nation … leaving the EU won’t isolate the UK. It will isolate England. Photograph: David Parry / PA Wire

Having a referendum on membership of the EU is a bit like having a referendum on membership of the moon's gravitational pull. You can vote to leave it all you like, but it will still be there, exerting the natural influence of its mass. Even China has EU regulations on its statute book, because it needs them to trade with Europe. The best that can be said of a possible withdrawal is that at last Westminster will have only itself to blame. Oh, and of course there will be an end to the regular convulsions of drama over the possibility of having a referendum on membership of the EU. Which admittedly does sound nice.

The poor old Tories – Europe drives them so bonkers. They're like cartoon characters whose eyes turn into pound-signs, except their pupils are shaped like crosses, for votes. The Conservatives are keen to be seen as the anti-Europe party. But Ukip has stolen their thunder. This is a disaster for the Tories for two reasons.

First, it destroys a carefully cultivated Tory image, whereby they can make tough-looking gestures to play to the grassroots.

Second, it destroys the second most important electoral advantage the Conservatives have left (the most important being the first-past-the-post voting system). The coalition has weakened the left's long-standing electoral problem, which was that the leftish vote was split while the rightish vote was a one-stop shop. Ukip has provided a protest vote for disenchanted Tories, just as – up until the moment when David Cameron promised Nick Clegg a rose garden – the Lib Dems provided an alternative to Labour. Now, they are more likely, if anything, to provide another alternative to the Conservatives. Oh, the irony.

Beyond party politics, however, there is not much logic in Conservative Europhobia. In fact, it runs contrary to many of the Conservatives' other long-cherished beliefs. How can people who were so against devolution for the UK's member states be so determinedly in favour of devolving away from Brussels? That's an easy one, isn't it? Devolution within the UK takes power away from Westminster, while leaving the EU will, the poor darlings imagine, give it more. But Scotland will want to stay in Europe, as Nigel Farage's short shrift in Edinburgh this week demonstrated. Wales will want to stay in Europe. Northern Ireland will want to stay in Europe. Withdrawal from the EU won't isolate the UK. It will isolate England, making lukewarm support for full independence, especially in Scotland, a great deal more attractive. The Conservatives, despite their interminable resentment of Europe, really haven't thought this through.

More intractable is the Conservatives' supposed commitment to globalisation and free trade, and supposed horror of protectionism and restrictive practices. Europe, for all its reputation as some kind of dastardly machine for the promotion of crypto-communism, is really just a hothouse environment in which the promised fruits of neoliberalism are forced into ripening more quickly. Whether or not it was right to huddle under the glass with so much of the rest of the continent (and at the risk of labouring a metaphor to death), the process of hardening off out in the global garden is likely to kill a few tubers.

Not Conservative tubers, though. The most deep hypocrisy of the right is seen in its attitude to immigration. The Conservatives are keen to promote themselves as the anti-immigration party, and shake their heads in disgust over the mass immigration that took place under Blair and Brown. However, Labour policy on immigration dates back to the "prawn cocktail offensive", under which New Labour persuaded the City of London that it would look after its interests. Look after them, Labour did, not only turning a blind eye to all kinds of tax dodges, but also obliging the Confederation of British Industry and the Institute of Directors, both of which are institutions stuffed with Tories whose political views took a poor second place to their passion for keeping wages down. Were the Tories to manage to get a referendum on Europe, win it, and put a curb on EU immigration, then, yes, there would be British jobs for British workers, probably alongside a nice non-EU regulation setting the minimum wage at the same level as universal benefit in order to make employing someone pay. People are told that immigrants stole their jobs. In truth, it was employers who wanted a ready supply of workers unused to the living conditions that it took the second world war for the ordinary people of Britain to achieve. The goal of neoliberal globalisation is supposedly a redistribution of wealth around the planet. It also, as the EU itself is discovering, redistributes poverty.

There can be no doubt that the EU is not an entirely successful experiment. It most definitely went too far, too fast. Certainly, there can be few people in Britain who are not now relieved to be outside the eurozone. But, even within Britain one can see the trouble with having disparate parts of the country, with disparate economic needs, all dancing to the same economic tune. Only too well.

The truth is that what's needed is for devolved and local government to be strengthened, and given more fiscal powers. But although the Conservatives like to proclaim their hatred of centralised and distant government, they are not too keen on that. Again, of course, it's all about power. If local government were to become more powerful, then Westminster would find itself either the government of the home counties or simply a mini-EU, passing legislation that allowed the regions of Britain to trade fairly and equally; legislation that would no doubt look uncannily similar to EU legislation. Because it's not the EU that is an extra layer of government that no one really needs – it's Westminster. The European parliament is an institution with a democratic deficit precisely because it exists only to enact what the heads of member states have agreed. Local government in Britain is similarly hampered by the directives of Westminster. Across Europe, national governments are struggling against the advent of their own irrelevance, desperate to stop the leak of any more power either above or below, even as countries fall to government by technocrat. The nation state itself is in crisis, and the denizens of Westminster are the people least likely to see or accept that.

A Britain outside Europe would be governed by multinationals, who would be attracted by low taxes and a population compelled to work, however disabled or ill or elderly they may be. Of course, the Conservatives are keen on a referendum. But they fail to understand that if they got their way, it would be a pyrrhic victory. All those who believe that mass immigration was some sort of politically correct leftwing conspiracy would soon get wise to the fact that they'd been had. In the end, if the Conservatives got their wish, and took Britain out of Europe, they'd be finished.

The west's crisis is one of democracy as much as finance

The spirit of dictators like Ceausescu is finding new life in the response of the European elite to pressures in the eurozone

• 
• • Slavoj Žižek
  • The Guardian, Wednesday 16 January 2013 18.22 GMT

Nicolae Ceausescu addresses Romania's Communist party congress in November 1989, shortly before he was deposed and executed. Photograph: Gerard Fouet/AFP

 

In one of the last interviews before his fall, Nicolae Ceausescu was asked by a western journalist how he justified the fact that Romanian citizens could not travel freely abroad although freedom of movement was guaranteed by the constitution. His answer was in the best tradition of Stalinist sophistry: true, the constitution guarantees freedom of movement, but it also guarantees the right to a safe, prosperous home. So we have here a potential conflict of rights: if Romanian citizens were to be allowed to leave the country, the prosperity of their homeland would be threatened. In this conflict, one has to make a choice, and the right to a prosperous, safe homeland enjoys clear priority …

It seems that this same spirit is alive and well in Slovenia today. Last month the constitutional court found that a referendum on legislation to set up a "bad bank" and a sovereign holding would be unconstitutional – in effect banning a popular vote on the matter. The referendum was proposed by trade unions challenging the government's neoliberal economic politics, and the proposal got enough signatures to make it obligatory.

The idea of the "bad bank" was of a place to transfer all bad credit from main banks, which would then be salvaged by state money (ie at taxpayers' expense), so preventing any serious inquiry into who was responsible for this bad credit in the first place. This measure, debated for months, was far from being generally accepted, even by financial specialists. So why prohibit the referendum? In 2011, when George Papandreou's government in Greece proposed a referendum on austerity measures, there was panic in Brussels, but even there no one dared to directly prohibit it.

According to the Slovenian constitutional court, the referendum "would have caused unconstitutional consequences". How? The court conceded a constitutional right to a referendum, but claimed that its execution would endanger other constitutional values that should be given priority in an economic crisis: the efficient functioning of the state apparatus, especially in creating conditions for economic growth; the realisation of human rights, especially the rights to social security and to free economic initiative.

In short, in assessing the consequences of the referendum, the court simply accepted as fact that failing to obey the dictates of international financial institutions (or to meet their expectations) can lead to political and economic crisis, and is thus unconstitutional. To put it bluntly: since meeting these dictates and expectations is the condition of maintaining the constitutional order, they have priority over the constitution (and eo ipso state sovereignty).

Slovenia may be a small country, but this decision is a symptom of a global tendency towards the limitation of democracy. The idea is that, in a complex economic situation like today's, the majority of the people are not qualified to decide – they are unaware of the catastrophic consequences that would ensue if their demands were to be met. This line of argument is not new. In a TV interview a couple of years ago, the sociologist Ralf Dahrendorf linked the growing distrust for democracy to the fact that, after every revolutionary change, the road to new prosperity leads through a "valley of tears". After the breakdown of socialism, one cannot directly pass to the abundance of a successful market economy: limited, but real, socialist welfare and security have to be dismantled, and these first steps are necessarily painful. The same goes for western Europe, where the passage from the post-second world war welfare state to new global economy involves painful renunciations, less security, less guaranteed social care. For Dahrendorf, the problem is encapsulated by the simple fact that this painful passage through the "valley of tears" lasts longer than the average period between elections, so that the temptation is great to postpone the difficult changes for the short-term electoral gains.

For him, the paradigm here is the disappointment of the large strata of post-communist nations with the economic results of the new democratic order: in the glorious days of 1989, they equated democracy with the abundance of western consumerist societies; and 20 years later, with the abundance still missing, they now blame democracy itself.

Unfortunately, Dahrendorf focuses much less on the opposite temptation: if the majority resist the necessary structural changes in the economy, would one of the logical conclusions not be that, for a decade or so, an enlightened elite should take power, even by non-democratic means, to enforce the necessary measures and thus lay the foundations for truly stable democracy?

Along these lines, the journalist Fareed Zakaria pointed out how democracy can only "catch on" in economically developed countries. If developing countries are "prematurely democratised", the result is a populism that ends in economic catastrophe and political despotism – no wonder that today's economically most successful third world countries (Taiwan, South Korea, Chile) embraced full democracy only after a period of authoritarian rule. And, furthermore, does this line of thinking not provide the best argument for the authoritarian regime in China?

What is new today is that, with the financial crisis that began in 2008, this same distrust of democracy – once constrained to the third world or post-communist developing countries – is gaining ground in the developed west itself: what was a decade or two ago patronising advice to others now concerns ourselves.

The least one can say is that this crisis offers proof that it is not the people but experts themselves who do not know what they are doing. In western Europe we are effectively witnessing a growing inability of the ruling elite – they know less and less how to rule. Look at how Europe is dealing with the Greek crisis: putting pressure on Greece to repay debts, but at the same time ruining its economy through imposed austerity measures and thereby making sure that the Greek debt will never be repaid.

At the end of October last year, the IMF itself released research showing that the economic damage from aggressive austerity measures may be as much as three times larger than previously assumed, thereby nullifying its own advice on austerity in the eurozone crisis. Now the IMF admits that forcing Greece and other debt-burdened countries to reduce their deficits too quickly would be counterproductive, but only after hundreds of thousands of jobs have been lost because of such "miscalculations".

And therein resides the true message of the "irrational" popular protests all around Europe: the protesters know very well what they don't know; they don't pretend to have fast and easy answers; but what their instinct is telling them is nonetheless true – that those in power also don't know it. In Europe today, the blind are leading the blind.

My Weltanschhaung - 17/02/2012

I am glad to read that the Vatican has at last been forced to cough up some taxes from the income it generates. Though I was shocked that they were exempt from taxes this far.

I am surprised that David Cameron will offer Scots more devolved power if they vote No in the forthcoming referendum. I thought why not devolve more powers before the referendum and therefore give yourself a better chance to win the referendum?

It has taken the energy watchdog so long to realise that energy companies are profiteering. But what have they done - issued a warning, 'Cut prices or else...'.

It now appears that tax avoiding pay deals maybe rife in Whitehall. It appears that 4000 bureaucrats' pay deals will be reviewed.

Financial fascism

By Chan Akya

If politics were just war by another name, then economics would be the favored armory of both sides. Europe has gone one step further last week, almost unimaginably bringing back the era of fascism as it contends with the unwieldy agglomeration of financial contradictions that the euro project has now become.

The birthplace of democracy, Greece, has gone back to a managed dictatorship after the collapse of the democratically elected George Papandreou government on Sunday, to be replaced by a national unity government with a technocrat at its helm. Reading between the lines, the idea isn't hard to understand: a pliant government in Athens that is helmed by a

 
eurocrat, unable to ask any questions of Brussels and unwilling to concede over any objections from the population of Greece.

The apparent crime of the Greeks was to ask their prime minister for a referendum on the latest series of proposals from European authorities on a new bailout for their country (see The men without qualities, Asia Times Online, October 29, 2011). This set off panic in stock and bond markets mid-week and prepared the stage for an ugly showdown as well as unprecedented developments.

For the European governments, this level of panic in the markets was simply unacceptable as it showed deep "ingratitude" on the part of the Greeks; that view of course conveniently ignores ground realities of austerity that the Greeks would endure on their own so that bankers in Paris and Frankfurt wouldn't face job or pay cuts.

Greece's prime minister was invited to the Group of 20 (G-20) meeting in Cannes, making the confab G-21 for a while according to wags, although I maintain that the "G" in G-20 stood for Greece all along. After receiving suitably strong tongue-lashings from German leader Angela Merkel and French President Nicholas Sarkozy, a suitably chastened Papandreou dropped plans for a referendum and instead started work on a national unity government that would have the implementation of the eurozone bailout plan as its major (and perhaps only) policy point.

G-20 released an insipid statement that went nowhere in terms of helping the Europeans. All the fond expectations of the Europeans were dashed to the ground - be it the increased role of the European Financial Stability Facility (EFSF) to which various countries would contribute (no contributions were forthcoming in the end), or expanded powers for the International Monetary Fund (IMF) to help manage the crisis (ditto).

Poorer countries objected to the very notion of further contributions to bail out rich European countries, particularly when the Europeans apparently couldn't agree on priorities. While the statement describes lofty ideals of growth globally, it does little to actually suggest ways and means of reversing the problems with countries and zones in recession: in particular, Europe.

To cut the eurozone's structural drag, countries will have to improve competitiveness. This can only be done if structural constraints on growth are removed, the main one of which is the overly generous social programs. Alternatively, Europe can choose to maintain social safeguards but will have to forsake a strong currency. Inflation would then do to the European lifestyles what common sense alone couldn't establish.

This is the meta context under which the European crisis resolution is being fought. Countries with savings - like Germany - do not wish to suffer from inflation but want instead that their southern neighbors simply destroy structural benefits instead. Southern countries would rather keep their benefit systems, but try to depreciate their currencies to a growth path.

Another issue and perhaps the core one is that the elite want one thing, and have decided to pursue that solution - written by bankers - without heeding the legitimate demands of those ostensibly being bailed out.

It gets worse. Not content with one unwieldy object, the G-20 also had to contend with a second one, namely Italy, wherein the government rejected calls for IMF aid while calling for "increased surveillance" and a formalization of the troika (European Union, IMF and European Central Bank) in case Italy needed funds later. Market observers who had to sit through months of uncertainty waiting for the Europeans to get their act together over a 100 billion euro (US$137 billion) bailout package for Greece will now have to do the same for a 1 trillion euro package for Italy.

Italian bonds crossed the magic level of 450 basis points (bps) in spread over Germany last week even as the EFSF failed in its attempted 13 billion euro funding deal. The level of 450 basis points is important because that sets rules with respect to collateral posting against global banks, and essentially puts a sovereign "in play" ie enhances volatility expectations in markets, with unspecified market demands for resolution driving sentiment.

It fell to the French president to tell off the Greeks in the end: plainly, he stated, that the Greeks could have any referendum they wanted, but would have to leave the euro if they went ahead with this particular one. Germany's most popular newspaper, the Bild, called last week for a referendum in Germany on whether Greece could stay in the single currency or not.

So it has come to this, that the French who started the era of modern European democracies with their storming of the Bastille and a cry of "liberty, equality and fraternity" essentially devalued their own history by telling the Greeks not to have inconvenient opinions. I can spy the ghost of Marie Antoinette demanding her head back.

The message from eurocrats couldn't have been more unequivocal if they had spelled it all out: democracy was an unnecessary complication in the grand European project.

Elsewhere, the new resident of the European Central Bank, Mario Draghi, conducted his first full meeting and started with an auspicious (I am being sarcastic) rate cut to get things going. The idea that the new ECB president would be populist and swing the monetary institution somewhat further on loose monetary policy than his predecessor ever managed was immediately (of course) played up in the popular media.

Think about it like this - the ECB has been criticized for inflicting greater pain on the highly indebted countries by raising rates and failing to do more towards monetary easing. The incoming head of the ECB likely has very similar inclinations to his predecessor (he announced, for example, that there was no mechanism for any country to leave the euro) but has decided to have a stronger public relations battle by starting off with a small rate cut that would do absolutely nothing to resolve the core issues because high interest rates are not the issue while wide credit spreads very much are.

It has been clear with every new European approach to the crisis that the primary objective of any grouping is to save the European financial system at all costs. This system includes within it a unwieldy common currency that has simply failed to meet its objectives for the 11 years of its existence. Rather than consigning the project to the dustbin of history, the elite of Europe choose to perpetuate the currency's existence at the expense of the people.

This is what fascism is all about at the end - an overwhelming subjugation of the individual at the altar of nationalism, the authoritarian rule of a financial system that disallows countries from following their own courses.

Between them, it is difficult to read too much into the events; even allowing for a fair bit of doubt to gather in one's mind the unshakable end result is a feeling of deja vu as it appears that the fascist past echoed by the likes of Mussolini, Franco and Hitler has come back to roost.