The euphemistically named European Stability Mechanism has just been set up and is taking huge amounts of taxpayers money from the countries in the Euro-zone in order to rescue the governments of the Euro-zone destroyed by the Euro-zone. Each member within the Euro, regardless of how bankrupt they are, must contribute to the paid up capital of 700 billion Euros. The rules then permit billions of Euros of borrowing on top of that – all guaranteed of course by the taxpayers of the countries it claims it is rescuing.
When countries in the Euro can’t afford to cough up more money (which on present form will happen quickly) then they lose their voting rights and the remaining countries get more voting power. Imagine the outcry if we told the unemployed they had lost the right to vote! The national constitutions of Euro-zone states requiring funds will be permanently suspended so that all financial, economic and budget decisions will be taken by the ESM, out of any control by national electorates. As Angela Merkel said:
The debt brakes will be binding and valid for ever. Never will you be able to change them through a parliamentary majority
The last sentence applies of course to the whole of the Euro “project” given the abject surrender of democratic sovereignty by national politicians – but it has rarely been spelt out so graphically. The ESM staff get privileges normally reserved for diplomats and full immunity for anything they do while working for the company. They are exempt from income tax (the ESM will itself tax its employees and keep the money).
The ESM also gets to audit itself, having a quaint idea that “independent auditors” “must be approved by the ESM’s Board of Governors”. The ESM will also be beyond the reach of any outside regulation, supervision or legal structures. After all these privileges (and the high salaries which undoubtedly accompany them) these great “bankers” will leave all the negotiating of the conditions of the loans made by the ESM to – the European Commission! Not bad work if you can get it.
But all the financing in the world cannot alter the basic problem of the Eurozone . It will not work because the bankrupt countries cannot recover economically, therefore cannot repay their debts and therefore will continue to collapse becoming (on top of being totally uncompetitive within a single currency) financially insolvent. They have no currency to find its correct level. They have no interest rates which might reflect their domestic reality. They cannot prevent capital flight because it is against EU rules. They cannot make their own social laws to suit their economy because the EU makes them centrally. Instead they are trapped, as William Hague said, in a burning house with no exit.
The only question is will this latest centralized, power crazed Euro-institution work economically? No. Will it be tolerated politically? No – nothing new there then, but this time the EU elite may not get away with it. There is only so much economic destitution, social revolution and political chaos the EU Commission and the BBC can cover up and only so much constitutional democratic loss hidden from voters and we are now well beyond that point. The denoument for the Euro-political class approaches.
