THE ORIGINAL CONCEPT OF SUPRANATIONAL DEMOCRACY FOR EUROPE BROUGHT LONG-LASTING PEACE TO THE CONTINENT. EU'S FOUNDER ROBERT SCHUMAN DESCRIBED DEMOCRACY AS BEING IN THE SERVICE OF THE PEOPLE AND ACTING IN AGREEMENT WITH THE PEOPLE. WHAT'S GOING ON TODAY? SEE ALSO WWW.SCHUMAN.INFO AND HTTP://DEMOCRACY.BLOGACTIV.EU .YOUR DEMOCRACY IN EUROPE
08 AUGUST, 2011
Euro5: TRUST is the key to a strong European currency. Schuman gave the plan for sound policy.
The reliability of Greek government deficit and debt statistics has been the subject to continuous attention for several years. The Greek general government data reported by the authorities have been persistently contested by Eurostat, far more frequently than for any other Member State.
On 2 and 21 October 2009, the Greek authorities transmitted two different sets of complete Excessive Deficit Procedure (EDP) notification tables to Eurostat, covering the government deficit and debt data for 2005-2008, and a forecast for 2009. In the 21 October notification, the Greek government deficit for 2008 was revised from 5.0% of GDP (the ratio reported by Greece, and published and validated by Eurostat in April 2009) to 7.7% of GDP. At the same time, the Greek authorities also revised the planned deficit ratio for 2009 from 3.7% of GDP (the figure reported in spring) to 12.5% of GDP, reflecting a number of factors (the impact of the economic crisis, budgetary slippages in an electoral year and accounting decisions).
‘This idea of ‘Europe’ will reveal to everybody the common bases of our civilization and will create little by little the bond similar to that which in ages past has forged our home countries. It will be a force that will breach all obstacles.’
'Ideology or dreams will not change the facts about finances, whether in the State budget or that of the family.'
26 JULY, 2011
Euro4: Eurozone leaders repeat: You must be honest! But honest practice brings honest money.
'As far as our general approach to private sector involvement in the euro area is concerned, we would like to make it clear that Greece requires an exceptional and unique solution.'
'All other countries solemnly reaffirm their inflexible determination to honour fully their own individual sovereign signature and all their commitments to sustainable fiscal conditions and structural reforms. The euro area Heads of State or Government fully support this determination as the credibility of all their sovereign signatures is a decisive element for ensuring financial stability in the euro area as a whole.'
'underscored the need to give priority to restoring sound budget and fiscal sustainability. ... Fiscal policies should aim to restore confidence by bringing debt trends back onto a sustainable path and ensuring that deficits are brought back below 3% of GDP in her time frame agreed by the Council.'
'We reaffirm that all euro area members must conduct sound national policies in line with the agreed rules and should be aware of their shared responsibility for the economic and financial stability in the area.'
'The crisis has revealed clear weaknesses in our economic governance, in particular as regards budgetary and broader macroeconomic surveillance. Reinforcing economic policy coordination therefore constitutes a crucial and urgent priority.'
'ensuring the quality of statistical data, essential for a sound budgetary policy and budgetary surveillance; statistical offices should be fully independent for data provision.'
'the clear determination of all Member States to do everything that is required to fully implement the Stability and Growth Pact.'
'New Europe needs to have a democratic foundation. Its Councils, Committees and other organs should be placed under the control of public opinion, a control that should be efficient while not paralysing action nor useful initiatives.'
Saturday, 13 August 2011
The European leaders are learning the lesson known to all monetary authorities throughout the ages. The main foundation of all money is trust. Once trust evaporates the currency collapses. It is like chasing after a wild animal let loose out of a field.
Is the European currency doomed to failure? No. The supranational European Community system is far more robust than any flawed plan for a currency. European unity is a powerful and ineluctable force, stronger than any politicians or self-serving group.
There is a plan for the European currency that will get the approval of all major sections of Europe. It would also make it extremely difficult for blackmail operations by speculators -- that is those who try to use the markets for immoral, selfish purposes.
On 10 February 1953 the European Coal and Steel Community introduced Europe's first Single Market. With a single market it was necessary that eventually a single currency would have to be built on the five institutions. The first Community had its own European tax, based on production, not currency or accountant-adjusted profits.
The idea of a currency was already implied in the Schuman Declaration of 9 May 1950. When the time was ripe, it should be built on the principles of supranational democracy.
When they created the euro, the European leaders did not follow the concept of a supranational democracy backing up the European currency. They thought they knew best. The naive or willingly ignorant politicians made an international currency based on so-called 'good intentions' and their equally faulty theory of human nature. They made their decisions in secret, relying on their own instincts and personal and political attachments to each other.
'Just make all the currencies relatively stable,' they said, 'convert the name to euro and, Hey Presto! you have a European currency!' They seem to think if they invited some darker culprits to join the euro gang, then they would appear white in comparison. It does not work that way!
And it was inevitable that the markets would test their theory and practical failures to destruction if they could. That is the nature of markets. It proved a vapour of self-deceit. The political 'partners' cheated on each other. They used the coffers of the 'own' States as their own party campaign funds. They cooked the statistics.
In a commercial company if such things were done, it would not only mean that the executives were fired, they would enter the gates of the local prison for a long stay. It's called embezzling. For some reason, politicians think that they are above such justice.
With the introduction of two further European Communities a broad range of other goods had to be brought into as Single Market, from fissile material to agricultural products. In the 1960s intra-Community trade was based on units of account later known as the ECU, the European Currency Unit. At a time when no one imagined the US dollar would be devalued, it was defined and set at parity with the dollar in terms of gold.
Then President Nixon took the dollar off the gold standard. So the politicians decided that they would remain on the gold standard. But France's Franc proved to be weak and de Gaulle did not want to be shown up. He was concerned about his rural and agricultural voters. Solid, honest money proved too hard for other light fingered politicians.
They fudged the matter. They brought in a highly complex system of compensatory funding. They were supposed to be temporary. Guess what? These handouts of tax money to the politicians' favourites became permanent and more and more complex.
The second fudge was not to use any standard at all but to make the currency up as they went along. Look ! No Hands! The European Currency was not based on US dollars based on gold. It was not based on gold. It is not even based on GDP. It is based on crooked statistics!
When the ancient kingdom of Lydia (now western Turkey) created a coinage that was used far and wide as a trading aid, it did so by assuring that the coins had
Coins replaced the earlier system of just weighing out a specific quantity of metal as a means of exchange. That required a system of standard weights. Some people cheated with the balances.
The earliest known legal code -- the Laws of the old Babylonian kingdom of Eshnunna which predates Hammurabi -- showed that wheat and barley were considered much more prized as exchange than money. The interest rate on the cuneiform tablets show barley had an interest rate of 33 percent while silver had only 20 percent. Food was more valuable and it was also perishable. Food is real. You cannot eat gold.
Two and a half thousand years ago, Aristotle, the Greek philosopher and royal tutor, warned that there was a big difference between economics (dealing with running the household) and chrematistics, the immoral (and ultimately senseless) hoarding or accumulation of wealth. There were three goods, an external good, a good of the body and a good of the soul.
Some of these principles were applied by his Macedonian student, Alexander the Great. Millions of coins were struck across his empire with a specific image and of standard weight. The museums and private collections of Alexander's silver tetradrachm indicate the fine detail of the coin production. It created a common external good. They circulated from Britain to Afghanistan, in Africa and beyond. The gold coins were known as philippi, after Alexander's father.
They were not easy to forge. At least in those days. Later generations shaved the rims of the coins, or forged them of inferior materials. That is what some European leaders are trying to do electronically today.
Everyone seems to be at it. The modern Greeks were the most flagrant. They probably did not have to learn much from the others. But they took the cheating a bit too far. Some politicians wanted to ignore the common politicians' problem and they persuaded them to let the fiddling go on for years. The others tried to put an end to it.
Remember the politicians were the people who gave you the Meat Mountains and Wine Lakes. Monetary fraud was less obvious and more devious. It is easy for one or more (in this case, many) States to illegitimately exploit the huge benefits of a common currency. They let the others keep the rules, remain honest and keep their books straight. False statistics didn't really fool anyone but no one wanted to cause a scene and shout: 'CHEAT!' at fellow politicians. They knew that once the blame game started all would be found guilty ins some sort of dubious practice.
And if they kept their mouths shut as many did, they would also be found guilty and irresponsible towards their own electorate because they had promised to keep their own currency solid and follow the common rules for the euro. Guilt by fact or guilt by collusion and association, that is the outcome of secret meetings without public accountability. That's why Schuman said that the Community democracy should be open with open meetings subject to public control.
Then the European Statistical service, Eurostat, put in the knife.
That's what the European Commission had to admit in the end. The Commission published a report about the fraudulent Greek stats in January 2010.
Why are budgetary statistics different in a electoral year? Why do they 'slip'? Aren't governments managing the budget properly regardless of what year it is? Or are they bribing the voters by giving them goodies from money they do not have? Would the executive committee of a tennis club coming up for re-election be considered ethical if it took out a loan to give free tennis balls to the membership before they voted?
Politicians do not want to discuss when governments are guilty of crimes that would send company executives to prison. Yet we are talking about sums of money larger than those of most commercial corporations. The leaders have to have the courage to treat finances as a non-ideological matter. They have responsibility beyond their parties to the people. And the people should have their say in the management of the monetary system, according to supranational democracy.
A common currency cannot be built when one or many States refuse to keep honest accounts. A Community must be built on values that include honesty to each other. This has huge advantages. An honest interchange builds a Community that cannot be broken. Honesty, the 9th of the Ten Commandments is a fundamental Biblical value on whichEuropean democracy is founded.
'You shall not bear false witness against your neighbour'
Schuman wrote:
Unless they realise the futility of any other path, the politicians are doomed to get deeper into a maelstrom of disaster.
The financial realist Robert Schuman -- who as Finance Minister and Prime Minister rescued France from widespread corruption and financial chaos after the World War, stabilizing the currency, balancing the budget and attacking galloping inflation -- had this additional warning:
Stealing other people's property was wrong in the time of the Laws of Eshnunna and it is wrong today.
A euro based on supranational democracy would not fail to gain the highest credit ratings in all rating agencies worldwide. That is evident because it would have already been examined and rated that way by European civil organisations, businesses, workers and consumers, via their controlling chamber. Yet EU politicians want to do it their way: party political internationalism. They are fighting a tide of adverse criticism that says it will not work. Despite their efforts at the Euro zone summit, US credit rating agencies have downgraded Greece because of the long-term loan swaps are considered a selective default.
The answer? In a phrase, honest conduct for an honest currency. Honest conduct does not come from words alone. Nor does it come from a system where the policeman is a paid up member of a gang. The control must be public and legal, not political.
Amid the multi-billion euro deal at the Euro zone Summit on 21 July 2011, all the leaders appealed their fellow politicians to be honest. They had in mind Greece, which they said posed a unique problem. They were not addressing the public, that is the voters. The voters are hardly relevant at this stage when elections are not in sight. They were addressing the markets. Their audience for this section was headlined Private sector involvement.
In other words, forget the voters. What they are interested in is the private sector and if it is going to loan any more money to a bunch of people who clearly cannot trust each other.
The top Eurozoners said:
So the leaders are saying: Do not consider what has happened in the past about what we said to the voters. We are now telling you bankers, financiers and capitalists, we will be honest.
Is there any reason why the bankers, speculators and financiers should not believe the government leaders? Aren't they all honourable people?
Well, it only takes a brief look at what the leaders have said in the past to have some doubts. Did they say that their signatures could not be trusted? No. They said the opposite. The reality was somewhat different. They had to continue to repeat this when news leaked out that raised doubts.
Only on 25 March 2011 the European Council had already
On 25 March 2010, the Heads of State and Government of the euro area issued a statement on unheaded paper:
The paper is unheaded because the euro zone meetings are not officially part of the legal framework of the EU. Protocol 14 of the Lisbon Treaty allows them to meet 'informally'.
I do not know why the Statement issued on 21 July 2011 was published on paper headedCouncil of the European Union as it was not a meeting of the Council of Ministers. Hardly honest. Why this subterfuge? Is it illegality-creep because the case needed shoring up? At least they hesitated to call it a European Council to avoid prime-ministerial objections from the British, Poles, Hungarians, Danes, Swedes, Latvians, Lithuanians, Romanians, Bulgarians and Czechs who were absent. Did the absentee States protest that the Euro zone Statement was a false-flag communication of the Council of Ministers?
It is a pity that, when the Heads of State and Government of the euro zone 'reaffirm their inflexible determination to honour fully their own individual sovereign signature', they do so in a fraudulent document. Worse, they say that 'the credibility of all their sovereign signatures is a decisive element for ensuring financial stability in the euro area as a whole.'
On 17 June 2010 the European Council said in its conclusions:
The government leaders were therefore obliged to present their accounts for inspection in the so-called 'European Semester'. This involved preventive and corrective aspects of the Stability and Growth Pact, a pledge central to the euro. It is a legal requirement in treaties since Maastricht.
Yes, yes, but who checks up on all the politicians and their sums? The European Commission -- but it is now composed entirely of politicians, not independent, competent personalitiesas the treaties require. The selection of the Commissioners is made by the governments who they are supposed to check. Hardly a guarantee of independence. The goverment ministers insist that all candidates should be party members! The Commissioners also insist on retaining party membership and attending party meetings. The outlaws are now the sheriffs!
Nearly all the States had distorted, corrupted or just ignored the Stability and Growth Pact. Among the first guilty Member States to do this were France and Germany. The French and German ministers immediately said that they should be let off the hook. The honest Dutch and others protested -- in vain. The Dutch said they were now paying for the Franco-German deficits. Other States got caught out later when the level of their statistical fiddling became apparent.
The Council added that new measures were necessary,
The 23/24 June 2011 the Heads of government and State in a full European Council noted:
Why do government leaders need to keep repeating the same old thing? Firstly because they have been found out not adhering to the solemn pledge they had all made. Secondly even after they had repeated this pledge for growth and stability, some of the politicians still wanted to overspend their budgets -- especially just before elections. And the others said nothing.
Is that an honest mistake or it because they wanted to be free for political or social bribery for votes?
It can be statistically shown that this was electoral bribery and not honest statistical mistakes. How? Because the errors in the statistics are all in the same direction. They are all hidden deficits. Deficits increase before elections.
So what should the leaders do about it? How can these addictions to bad habits be resolved? In a Community moral values must be agreed by all. The honesty of politicians' decisions is exposed when times turn rough. When they were considering monetary union in around 1999, the price of oil was around 9 dollars a barrel. That was the free market price. Times and morals were easier. Countries like Italy had a huge surplus. Then energy blackmail recommenced. The twelve-fold rise in oil prices in a dozen years not only strained the economies but exposed corrupt practice and speculative bubbles.
Consider what would happen if your local tennis club, commune or parish had a group of politicians who were accused of corruption. One may have been a worse culprit than the others but they were all in it together. Would the local parishioners or voters agree that the secret meetings should continue? Would they be happy that in the many subsequent secret meetings of the clique of culprits, the group issued the same sort of communiques on offically headed paper saying: 'Don't worry, the entire Tennis Club is insisting on being honest'?
Probably not. What may be happening was that the politicians were dividing up the spoils amongst themselves or inventing new ways to hide the corruption. They might be insisting on meeting in private so that the more corrupt members were putting pressure on the least corrupt members so that they would comply with their wishes. In some States, the politicians are now facing legal cases in the courts.
That is why Schuman and the other more politically honest Founding Fathers insisted that the Council should be open. Schuman wrote that
The solution for the euro is ultimately:
The definition of the European currency should be based on a full meaning of what is the common European good, not as happened what seemed good to a handful of politicians. The Stability and Growth Pact -- which was not observed by Member States with few exceptions such as Luxembourg -- is a poor approximation of what should be done.
Openness is not impossible in monetary matters. It is only impossible when for years politicians have been making cushy deals between themselves. On Greece it covers a lax period of thirty years. The questions arose when a cushy deal was made by politicians that it should leap forward from the least qualified candidate to join the EU -- according to the then Commission President Roy Jenkins -- to be the first. The questions remained unanswered when lots of EU money went missing. They were reinforced when in spite of huge and constant increase in its deficits and its past history, the politicians agreed to let Greece join the euro. It got even deeper into murk when statistical fiddling in many of the new euro States was exposed.
Who is in charge of monetary policy the central banks or the politicians? If it is the central banks that are by treaty law independent, why do politicians still have secret meetings on the monetary fundamentals? Are the central banks so secretive? Good banking practice is to publish the minutes of the monetary committee a few days after the decisions are reached. That way openness and protection of the currency from speculation is guaranteed. The Bank of England and the Riksbank of Sweden, which are not part of the euro, do this.
So why does the European Council refuse to have open sessions on what should not be their business? Why does it refuse to publish anything that resembles minutes, even though it is obliged to by treaty law? Is it something to do with their concept of honesty and honest practice?
The question of honesty has now been raised in the context of a global financial calamity. It is for the Member States to show they are serious. It they are, they will implement the treaties that call for independent institutions, not continue to fill them with compliant politicians.
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