28 September 2011 9:46 AM
The streets of Athens: the cradle of democracy a second time?
Last night the crowds were out in Athens again, protesting against the agreement by parliament to introduce a property tax. Or rather, last night the men who were once the law-makers in a state which was once sovereign did what the EU-IMF-ECB German austerity enforcers told them to do -- 'pass a property tax or no more bail-out billions' -- and they did it: and the Greeks didn't like it.
So the crowds were again in front of the parliament building, shouting and roaring. But it looks like there were only 1,000 people out, police made just one arrest, and nobody was hurt. Hmmm. Call that a protest?
Yes, but only if the trade unions at the public-sector electricity company agree to cut off the electricity. Since we now know that, despite the orders from the EU-IMF-ECB for vast spending cuts in the Greek public sector, the government has actually added 25,000 jobs in the public sector since this 'austerity' started, we have a pretty good idea who has the real power in deciding to implement the EU-IMF-ECB's policies of foreign-imposed tax hikes or not. I'd say 'not' is very likely, since the unions clearly can over-ride Papandreou's policies.
Still, you can bet full-on riots will be back in Athens before too long. Just yesterday, Ben May, European economist at Capital Economics in London, told clients that 'we continue to think that the Southern European economies will either fall back into or remain in recession over the next couple of years. Against this backdrop, economies' government debt to GDP rations will continue to rise which may eventually prompt several of these economies to default.'
In otherwords, all this austerity will bring no gain at all to the Greeks and other Club Med countries. The austerity will lead to nothing except more austerity and more misery, more years of shrinking economies.
All of which makes the frequent insistence by the European Commission that 'we have no policy for austerity, we have policies for fiscal consolidation and growth' (yes, the spokesmen actually say that: Brussels is not imposing austerity on anybody, only 'fiscal consolidation.')
Enough of this 'fiscal consolidation' and the Greeks will be back on the streets, and in more than crowds of 1,000, especially since the austerity has no pay-off at all, not without Greece getting out of the euro.
For if Greece stays lashed to the euro, the only way it will be able to limp on is if the German, Dutch and other northern taxpayers set up a permanent feed of billions each year to keep it going -- because it cannot revive its economy in a fiscal and economic union with Germany.
We already know Greece is going to default, and the ructions from that are going to be so much worse when Italy goes over the edge, too.
And we already know that the Greek people are gutsy and very much not stupid. So what will their reaction be when they are told that all their suffering since last year to avoid default and 'save' the euro will result in default anyway?
Judging by their past reactions, I'd say they'd be furious that the default wasn't triggered last year, when it became obvious that Greece was insolvent, and before all these new bilions in debt were forced on the state by Brussels. And they will be furious when they grasp that 'save to monetary union' actually means 'sacrifice the Greek people.'
Somewhere along the ideological line, a currency -- and no currency is meant to be anything more than a means of exchange and a store of value -- has become a god who must be appeased by human sacrifice.
This may be Athens' chance to become the cradle of democracy once again.
A German force to admire: Kerber of the constitutional court
The professor was in Brussels to speak to a packed house -- and I mean packed: even a heavy from the German industrial giant ThyssenKrupp was forced out of the room by the crowd -- at a meeting organised by New Direction, a free-market think tank established here in Brussels last year. (New Direction have Margaret Thatcher as patron and Geoffrey Van Orden, a Tory MEP, as president, Down in the fine print they say they receive a grant from the European Parliament. Their goal is to 'help steer the European Union on a different course.' Good luck with that one, mate.)
Still, the think-tank was smart enough to invite Kerber to Brussels, and Kerber did not disappoint -- though he did surprise, and from the start. After all the coverage I've read of his work, I expected him to be a tweed-jacketed academic type (come on, what kind of appearance do you expect from someone at the Technische Universitat Berlin?).
Instead he looks like a Prussian merchant banker: turns out he was in the financial markets for years before he became an academic and started torturing the European Central Bank's plans to turn the eurozone into a fiscal transfer union. No wonder the 50 people who joined in his challenge at the constitutional court included leaders of German industry and top academics: he is one of them.
Kerber spoke about the future of the euro (short version: it hasn't got a future, not in its present form) for an hour, without notes and in perfect English. He even threw in a small joke about Jean ClaudeTrichet speaking at the European Parliament, mimicking the ECB chief's French-accented English: a German speaking English pretending to be French. Only in Brussels.
But Kerber's argument stands -- that the bailouts are against European treaty law and against the German constitution because they endanger the monetary stability of the country. More, the bailouts endanger German sovereignty because they leave the German taxpayer at the mercy of decisions taken by the EU insitutions, instead of by the German government and parliament.
The German people are becoming more and more aware of this truth: that continued German government agreement to bail-outs will leave them with no power, but with an unlimited liability. The Germans will not let this go on.
'The euro experiment is effectively over.' said Kerber. 'Now it must be brought to a close.'
That's the politically-motivated policy of buying up (let's face it, rubbish) debt from on-the-road-to-hell eurozone states such as Italy.
That sounds technical. What it means is that the ECB has been turned into a mechanism for intervening in the spending and taxation plans of all eurozone member states, and endangering the balance sheet of the ECB at the same time. Land enough junk on the books -- want to stock up on Greek sovereign debt, anyone? -- and at some point this so-called lender of last resort is going to have to be recapitalised itself, and by member states who in many cases are already crippled by sovereign debt and bank debt. Road to hell, yes indeed, road to hell.
This is the policy against which the German central bank chief Weidmann has been speaking. Now it seems he is willing to go beyond mere debate inside the ECB: what he could be forming is a Resistance Movement -- and this inside one of the EU institutions, where there is no Official Opposition ever.
According to the Eurointelligence account of the FAZ story, 'Weidmann invited potentially like-minded members of the ECB governing council to the beautiful Reingau village of Eltville to discuss an alliance within the ECB against the controversial bond buying programme.'
'Among the invitees are Yves Mesch, Luxemburg's central bank governor and apprarently the only central banker who has consistently voted with Weidmann and ECB chief economist Jurgen Stark against reactiviating the SMP. Another guest is the Dutch central bank president Klaas Knot.'
What all this means is that Weidmann has the gumption to take action against a measure he believes to be wrong instead of just 'dramatically slamming the door.'
In other words, the governor of the German central bank and member of the ECB Governing Council is leading a revolt against the leading policy of the ECB.
As Eurointelligence says, 'This is a development whose significance can hardly be overstated.'
Or as I say, give that man Weidmann a black beret and a Bren gun, and tell him 'Welcome to the new Maquis.'
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