Germany Abandons It’s Citizens to Destitution
The EU’s useless money printing
The European Central Bank was based in Frankfurt because Germany said (in typically co-operative manner) that either they would get the ECB headquarters or the Euro would not happen! Now Germany has been outvoted and the ECB is engaging in the kind of extreme money printing which the German State has always abhorred.
This money printing has become necessary because Germany long ago abandoned its new “European citizens” in Italy, Ireland, Greece, Portugal and Spain to economic collapse, social destitution, and financial bankruptcy. Germany believed that 25% unemployment, 55% or 60% youth unemployment and years of depression were a price worth paying for their European project.
It was the 1992 Maastricht Treaty which turned all the citizens of the members of the European Union into “European citizens” with all the rights and duties implied thereby. Given Germany’s political and economic dominance of the EU this meant that European citizens were of course German citizens. That Treaty and subsequent treaties allowed all citizens not only to enter other member states to work but gave them free movement even if they had no work and the member states had to provide social security and welfare benefits to those citizens.
If for instance the UK has to provide such benefits for these new “German citizens” who move across borders then Germany should surely be responsible for the impoverished citizens in Greece, Spain and Italy and – like London (4.4% unemployed) within the UK which shares a social support system with the North East of England (8.5% unemployed) German taxpayers (5.6% unemployed) should be making massive transfers to Greece (25% unemployed) Spain (25% unemployed) etc so that those governments can provide welfare without bankrupting their citizens and companies with ever high taxes – which in turn create even more unemployed.
But Germany wanted all the economic power and political dominance which the Eurozone gave it but refuses to accept its social responsibilities. Indeed it prevented the European Central Bank from following its specific remit (to aim for 2% annual inflation) even when that target was being missed for two long years between 2013 and 2015. The German State continues to run a massive balance of payments surplus and has ground its Government spending down to a balanced budget – in the midst of the worst economic crisis in Europe since the second world war. You don’t have to be a Keynesian deficit spending economist to recognise these policies are grotesque.
That the conservative and socialist parties of Europe have enthusiastically supported this mayhem is shocking and obscene. When voters in Europe start going to the polls in the UK, Greece and Spain this year they can consider the “compassion” of these so called “centre parties” when they vote.
The “Quantitative Easing” which involves the ECB pumping some 1.14 trillion Euros into the economy over the next 16 months is of extremely doubtful effect. It comes years too late and will benefit (by buying private and public bonds from banks, hedge funds and large corporations) the very institutions which are swimming in cash – but no reason to invest it.
As I pointed out in my 2012 paper to the House of Commons Treasury Select Committee “Quantitative Easing and the Consumer – unblocking the log jam” the purpose of creating cash was twofold
- firstly to rescue the banks balance sheets from the gravest crisis for 100 years and
- secondly to provide cash for the consumer so that his spending would give confidence to banks to lend and companies to invest.
By taking a typically corporatist view of business (the view of the State and the banks and the corporations) the logic was entirely upside down. Business is not the start of the economic and business cycle – consumers are. If they are taxed to the hilt then they will not spend. So the banks will not lend to companies who see no reason to take the risk of investment and job creation.
So it is now in the Eurozone with its fatuous too late money printing. It will flood with cash those who are already flooded with cash. It will raise share prices and property prices (at least where properties are being used – not where property is empty because of those poor consumers!)
My 2012 paper proposed a Temporary Tax which would have been levied on the largest corporations and banks in proportion to their cash balances, used to massively reduce taxes on consumers and empty properties and then repaid to those banks and corporations as Government receipts rose in the recovery.
Temporary Taxes have been used in other countries if not in the UK and the current serious crisis is a classic case for their use.
But that would assume that politicians have some interest in the consumer and since left right and centre across Europe have absolutely no interest in the voter/consumer then it is only when the extremes and inadequate of politics, elected in desperation by decent people, that those establishment politicians might – too late – take notice of rational advice!