Britannia Radio

17 July 2009 3:10 PM

Gott im Himmel! The German people say 'Nein!' to more Europe

If you ever wondered how it was that the German people were persuaded to give up their splendid, rock-solid deutsch mark to sign up for the new untested euro currency -- and it is something you might do well to give some thought to, since the pressure still goes on for the British people to give up their currency, too -- you would have to dig back into the Maastricht treaty, to something known as the 'no bail-outs clause.'
    This was an assurance to the Germans that, if they went into the euro, there was no chance they would be called on to bail-out other eurozone countries if those countries got themselves into economic trouble. Since the other eurozone countries were going to include countries with historically-loony governments such as Italy, it was an assurance upon which the Germans insisted.
   Trouble is, now that a whole bunch of eurozone countries are in big trouble -- Italy, Spain, Greece, Ireland, Portugal among them -- the German Chancellor, Mrs Merkel, has been indicating that of course no eurozone country will be allowed to be forced out of the currency because of its government's deficits, and of course no eurozone country will find itself unable to borrow money in the sovereign debt markets, no matter how bad its credit rating gets. She has let it be known that Germany and the other strong euro countries will bail them out. There has been talk of eurozone bonds being issued to cover the debts of individual states.
   But how could this happen? What about the bail-out clause? There is a vague little clause in Maastricht, Article 100  -- and there are these vague little clauses tucked in all the euro-treaties, planted by the Brussels politburo the way the old Soviet KGB used to plant sleeping agents, to be called in for duty when they are needed  --  which allows bail-outs for an individual member country following 'natural disasters or other exceptional occurrences beyond its control.'
   Somehow the ever-closer-union Mrs Merkel wants to fudge the fiscal and economic stupidity of a eurozone country into something equal to a natural disaster such as a tsunami sinking the Netherlands. This 'assurance' is being used as part of the propaganda campaign in Ireland by the government to persuade the Irish to vote Yes when they are forced to hold a second referendum on the Lisbon Treaty in October: Brian Cowen's government are saying that if Ireland votes No it will lose all this guaranteed 'protection' from the other eurozone countries. 
   But just how stupid has the Irish government been? What profligacies are the Irish being told the eurozone members, in particular the Germans, will protect them from? At the moment, Ireland, a tiny eurozone country of just 4.2m people, is having to borrow €400m (£345m) a week just to keep its national head above water. Half of that borrowing is going into the bottomless pit of public sector pay. Because of this, Ireland is paying the highest penalty interest rate in the entire eurozone, a premium rate over 10 years of about two percent over German debt. If the Dublin government does not stop its fiscal haemorraghing -- the government will spend €60bn (£52bn) this year, but take in only €34bn (£29bn)  in tax revenue -- at some point the sovereign debt markets may refuse to lend it any more money.
   That is when Mrs Merkel and German financial support and maybe the eurobond would step in. Or so the German government, and the Irish government, want the Irish voters to believe.
    But the German people, it seems, have other ideas. The Institute for Free Enterprise in Berlin, along with the Open Europe think-tank in London, have today published a poll taken by the German polling company Psyma which shows that just over 70 percent of the German people do not believe German taxpayer's money should be spent on helping bail-out countries such as Ireland or Greece. In short, the German people say 'Nein!' to bail-outs.
   Here is a reaction to the poll from Wolfgang Muller of the Institute for Free Enterprise: 'Germany is already Europe's sugar daddy. This poll confirms that German tax-payers are not willing to accept an ever-increasing fiscal burden.
    'Bailing Ireland out would send the wrong signals to governments in the EU. Any plan to try and "buy" Ireland's Yes vote to the Lisbon treaty with talk of a bailout must be strongly rejected.'
    Bless the German people. If they hold to this resistance, the eurozone train could be derailed when debt forces a member state to crash out of the euro currency. I'd bet Italy would be the first out, followed by Greece. Even Peter Mandelson could not manoeuvre Britain into a trainwreck like that.